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The Next Questions Refer to the Following

Question 14

Multiple Choice

The next questions refer to the following.
Suppose currency traders expect that one year from now, £1 will be worth $1.50, and the one-year risk-free interest rate in the UK is 7% while the one-year risk-free rate in the US is 3%.
-Then according to uncovered interest parity,today's spot rate should price £1 at


A) $1.35
B) $1.40
C) $1.44
D) $1.56
E) $1.65

Correct Answer:

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