Suppose 90-day investments in Britain have a 6% annualized return and a 1.5% quarterly (90-day)return.In the U.S.,90-day investments of similar risk have a 4% annualized return and a 1% quarterly (90-day)return.In the 90-day forward market,1 British pound equals $1.65.If interest rate parity holds,what is the spot exchange rate ($/£)?
A)$1.4924
B)$1.6582
C)$1.8240
D)$2.0064
E)$2.2070

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The Answer of Suppose 90-day investments in Britain have a 6% annualized return and a 1.5% quarterly (90-day)return.In the U.S.,90-day investments of similar risk have a 4% annualized return and a 1% quarterly (90-day)return.In the 90-day forward market,1 British pound equals $1.65.If interest rate parity holds,what is the spot exchange rate ($/£)?
A)$1.4924
B)$1.6582
C)$1.8240
D)$2.0064
E)$2.2070

Suppose 90-Day Investments in Britain Have a 6% Annualized Return