Suppose the spot exchange rate is 0.5491 pounds per U.S.dollar,while the risk-free borrowing rate is 4% in Britain.If the "fair" exchange rate is 0.5544 pounds per U.S.dollar,what is the risk-free borrowing rate in the United States?
A) 5%
B) 4%
C) 3%
D) 2%
Correct Answer:
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