Test Bank

15. Suppose that the one year U.S. interest rate is 5%. If the one year forward rate against the pound is $1.75 per pound and the spot exchange rate is $1.78 per pound, what must the equivalent British interest rate be if covered interest parity holds? A) 3.29%. B) 6.69%. C) 3.31%. D) 6.83%. E) … ................
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