The spot rate for the British pound currently is £.57 per $1. The one-year forward rate is £.58 per $1. A risk-free asset in Canada is currently earning 2.5 percent. If interest rate parity holds, what rate
Can you earn on a one-year risk-free British security?
A) 4.18 percent
B) 4.30 percent
C) 4.86 percent
D) 5.10 percent
E) 5.42 percent
Correct Answer:
Verified
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