Assume the current spot price is $1.62/₤ and the 3-month forward rate is $1.64/₤. Which one of these statements is correct given these rates?
A) The pound is selling at a premium relative to the dollar.
B) The real interest rate in the U.S. is higher than the real rate in the U.K.
C) The dollar is expected to appreciate.
D) The dollar is selling at a premium relative to the pound.
Correct Answer:
Verified
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