Question

Suppose that the interest rate differential at 3 months between US Bonds and British Bonds is 5%

At the same time, the interest rate differential at 3 months between US Bonds and Swiss Bonds is 5%

If the Uncovered Interest Rate Parity holds, the exchange rate between $ and British Pound, and the exchange rate between $ and Swiss Franc...

		A. must be the same
		B. must be different, and in particular, it must be that  the exchange rate between $ and British Pound is lower than the exchange rate between $ and Swiss Franc
		C. not enough information (I need to know the expectations on future spot exchange rates for both currencies to be able to say how they compare to each other!)
		D. must be different, and in particular, it must be that the exchange rate between $ and British Pound is higher than the exchange rate between $ and Swiss Franc

Answer 1