Ignoring Risk Differences, If We Observe American Investors Purchasing Foreign

Multiple Choice

Ignoring risk differences, if we observe American investors purchasing foreign bonds when the U.S.interest rate is above the foreign interest rate, we could assume that:

A) American investors lack good information
B) These investors expect the dollar to appreciate over the life of their investment
C) These investors expect the dollar to depreciate over the life of their investment
D) These investors expect that U.S.inflation will increase