13 Interest rate parity. Consider investors who invest in either US or British one-year Treasury bills.

Assume zero transaction costs and no taxes.

a ‘If interest rate parity exists, then the return for UK investors who use covered interest arbitrage will be the same as the return for US investors who invest in UK Treasury bills.’

Is this statement true or false? If false, correct the statement.

b ‘If interest rate parity exists, then the return for British investors who use covered interest arbitrage will be the same as the return for British investors who invest in British Treasury bills.’

Is this statement true or false? If false, correct the statement.