Assume That the U

Multiple Choice

Assume that the U.S. interest rate is 10%, while the British interest rate is 15%. If interest rate parity exists, then:

A) British investors who invest in the United Kingdom will achieve the same return as U.S. investors who invest in the U.S.
B) U.S. investors will earn a higher rate of return when using covered interest arbitrage than what they would earn in the U.S.
C) U.S. investors will earn 15% whether they use covered interest arbitrage or invest in the U.S.
D) U.S. investors will earn 10% whether they use covered interest arbitrage or invest in the U.S.