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a) Briefly explain the relationship between returns on deposits in the US and expected returns on...

a) Briefly explain the relationship between returns on deposits in the US and expected returns on deposits in the UK, as described by the uncovered interest parity condition. (That is, explain how investors can earn returns in each of the assets, and how much they expect to earn on each). 2.b) Why is the uncovered parity condition an outcome of risky arbitrage? Which element of the uncovered parity condition in equation (1) do we consider to be risky?

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