If the interest rate in the U.S. is i $ = 5 percent for the next year and interest rate in the U.K. is i £ = 8 percent for the next year, uncovered IRP suggests that
a). The pound is expected to depreciate against the dollar by about 3 percent and the dollar is expected to appreciate against the pound by about 3 percent.
b). The pound is expected to appreciate against the dollar by about 3 percent.
c). The pound is expected to depreciate against the dollar by about 3 percent.
d). The dollar is expected to appreciate against the pound by about 3 percent.
