Suppose the interest rate in the U.K. is 4% for 90 days, the current spot rate is $2.00/£, and the 90-day forward rate is $1.96/£. If the covered interest rate differential is about zero, then the interest rate in the U.S. for 90 days is:
A) 6 percent.
B) 4 percent.
C) 3 percent.
D) 2 percent.
Correct Answer:
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