If the Interest Rate Is 7 Percent on Euro-Denominated Assets

Multiple Choice

If the interest rate is 7 percent on euro-denominated assets and 5 percent on dollar-denominated assets,and if the dollar is expected to appreciate at a 4 percent rate,for Francois the Frenchman the expected rate of return on dollar-denominated assets is

A) 11 percent.
B) 9 percent.
C) 5 percent.
D) 3 percent.
E) 1 percent.