Assume the spot dollareuro exchange rate is 135 and in one

Question

Assume the spot Dollar/Euro exchange rate is $1.35/€ and in one year you expect the exchange rate will be $1.5/€.

(I) Over the next year the US dollar is expected to appreciate against the euro.

(II) BMWs will be more expensive to US car buyers.

a) (I) is true; (II) is false

b) (I) is false; (II) is true

c) Both statements are true

d) Both statements are false