Assume the spot rate for the British pound is currently £.6229 per $1.The 1-year forward rate is £.6238 per $1.A risk-free asset in the U.S.is currently earning 2.4 percent.If interest rate parity holds,approximately what rate can you earn on a 1-year risk-free British security?
A) 2.18%
B) 2.25%
C) 2.46%
D) 2.55%
E) 2.59%
Correct Answer:
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