Suppose that the one-year forward rate on pounds is $1.75£. Given no arbitrage opportunities,this implies that traders expect:
A) the spot rate to be $1.75£ in one year.
B) the spot rate to be greater than $1.75£ in one year.
C) the spot rate to be less than $1.75£ in one year.
D) the spot rate to be greater than or equal to $1.75£ in one year.
E) the spot rate to be less than or equal to $1.75£ in one year.
Correct Answer:
Verified
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