If the Interest Rate Is 7 Percent on Euro Deposits

Multiple Choice

If the interest rate is 7 percent on euro deposits and 5 percent on dollar deposits,and if the dollar is expected to appreciate at a 4 percent rate,

A) euro deposits have a higher expected return than dollar deposits.
B) the expected return on euro deposits in terms of dollars is 11 percent.
C) the expected return on dollar deposits in terms of euros is 1 percent.
D) the expected return on euro deposits in terms of dollars is 3 percent.
E) the expected return on dollar deposits equals the expected return on euro deposits.