Solved

Assume the Following: the Current Spot Rate S$/£ = 2

Question 8

Multiple Choice

Assume the following: the current spot rate S$/£ = 2.00 and the annual interest rates: iUS = 4% and iUK = 8%.According to covered interest parity,if an intern at a bank in U.K.sets the 90-day forward: F90$/£ = 1.80,then:


A) the intern has correctly set the forward rate.
B) both U.S. and U.K. investment returns are equal.
C) the British investment return exceeds the U.S. investment return
D) the U.S. investment return exceed the British investment return

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents