Suppose the spot exchange rate is 2 U.S.dollars per British pound.The forward exchange rate is 1.9 dollars per pound.Which of the following is true?
A) The U.S.inflation rate is lower.
B) The pound is selling at a premium.
C) The pound is selling at a discount.
D) U.S.interest rates are lower.
E) More than one of the above is true.
Correct Answer:
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