The spot GBP/USD exchange rate is 0.5025/USD, and the one-year forward rate is GBP 0.5048/USD. If the annual interest rate on dollar CDs is 6 percent, what would you expect the annual interest to be on GBP CDs?
A) 5.52 percent
B) 6.49 percent
C) 3.55 percent
D) 8.25 percent
Correct Answer:
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