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The observation that if two investors from different countries have the same expectation of the probable distribution of future exchange rates, the expected returns of the two currencies are not offsetting. If the current exchange rate of U.S. dollars per pound equals 1.5 and a U.S. investor and a U.K. investor both expect it to change to 1.6. The expected return of the dollar from the U.K. investor's perspective equals -6.25%, whereas the expected return of the pound from the U.S. investor's perspective equals 6.67%
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