Suppose the spot exchange rate between U.S.dollars and the U.K.pound is $2/£ while the forward rate is $1.90/£.Which one of the following is true?
A) The value of the U.K.pound is expected to remain constant.
B) The U.K.pound is selling at a premium.
C) The U.K.pound is selling at a discount.
D) The U.K.pound is expected to appreciate.
E) The U.S.dollar is expected to depreciate.
Correct Answer:
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