What effect will this have on dollar and pound

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Reference no: EM131531607

Suppose the British government bonds' on average have 5% yield to maturity, while the US treasury bills have an average of 4% yield to maturity. Other things being equal, what effect will this have on dollar and pound? :

1. pound will weaken and dollar will strengthen

2. pound will strengthen and dollar will weaken

3. Both currencies will weaken

4. Both currencies will strenghen

Reference no: EM131531607

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