If the spot rate of the British pound is $1.50, and the one-year forward rate has a discount of 3 percent, the one-year forward rate is $____.
A)1.50
B)1.47
C)1.55
D)1.46
E)None of the above

Question

Quizplus · Accepted Answer

The one-year forward rate can be calculated by applying the 3 percent discount to the spot rate of $1.50. This results in a forward rate of $1.50 * (1 - 0.03) = $1.455, which rounds to $1.46.

If the Spot Rate of the British Pound Is $1