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Interest rate in the united kingdom

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Suppose the U.S. dollar interest rate is 3%, while the interest rate in the United Kingdom is 6%. Your friend thinks he can convert his dollars, invest in the United Kingdom and convert his pounds back into dollars at the end of a year, allowing him to make a lot higher return. Assuming uncovered Interest parity (UIP), explain why he is incorrect.

Reference no: EM131606929

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