Assume the Interest Parity Condition Holds and That Individuals Expect

Multiple Choice

Assume the interest parity condition holds and that individuals expect the dollar to appreciate by 5% during the coming year.Given this information,we know that

A) the interest rate differential between the two countries is less than 5%.
B) i < i*.
C) i = i*.
D) individuals will only hold foreign bonds.
E) none of the above