Exchange rate movement relationship and interest rate parity

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Reference no: EM131535528

Consider two countries, A and B, whose currencies are a and b, respectively. The interest rate in A is greater than the interest rate in B. Which of the following is true according to the expected exchange rate movement relationship and interest rate parity, respectively? a. a is expected to appreciate relative to b, and a trades with a forward discount. b. a is expected to appreciate relative to b, and a trades with a forward premium. c. a is expected to depreciate relative to b, and a trades with a forward discount. d. a is expected to depreciate relative to b, and a trades with a forward premium.

Reference no: EM131535528

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