The US interest rate is i$ = 3 % for the next year and the UK interest
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Question:
The US interest rate is i$ = 3 % for the next year and the UK interest rate is i = 6%. If I borrow money in UK and invest in US for the next year, uncovered IRP (carry trade) suggests that I will make money if and only if:
a.the dollar appreciates against the pound by more than 3%.
b.the dollar appreciates against the pound by less than 3%.
c.the pound appreciates against the dollar by less than 3%.
d.the pound appreciates against the dollar by about 3%.
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