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