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(Solved): Assume that the uncovered interest parity (UIP) condition holds. Also assume that the US interest ra ...



Assume that the uncovered interest parity (UIP) condition holds. Also assume that the US interest rate is less than the UK interest rate. Given this information, we know that investors would expect

(a) the pound to depreciate.

(b) the pound to appreciate.

(c) the dollar-pound exchange rate to remain fixed.

(d) the U.S. interest rate to fall. (e) none of the above.



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Ans:- Uncovered Interest Parity:- According to the uncovered interest rate parity (UIP) hypothesis, the variation in rates among th
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