Assume interest rate parity exists. If the spot rate on the British pound is $2 and the 1-year British interest rate is 7 percent, and the 1-year U.S. interest rate is 11 percent, what is the pound's forward discount or premium?
A) 3.74 percent premium
B) 3.74 percent discount
C) 3.60 percent premium
D) 3.60 percent discount
Correct Answer:
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Q2: Which of the following statements is incorrect?
A)
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Q7: If the U.S. government imposed trade restrictions
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Q10: If the demand for British pounds _,
Q11: If U.S. interest rates suddenly become much
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Q15: Generally, a _ home currency can _
Q16: A country that pegs its currency is
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