Suppose that the US Dollar - Pound Sterling rate equals $1.60, while the 1-year forward rate is $1.64 per pound. The yields on 1-year US and UK Treasury bills are 6% and 5% respectively. What is the rate of return to an American investor who buys pounds in the spot market, invests in UK Treasury bills, and simultaneously sells the expected Pound Sterling proceeds from this investment in the forward market? Given these circumstances, which country would you expect to experience capital outflows? - capital inflows