If the Forward Exchange Rate of the Dollar in Terms

question 18

Multiple Choice

If the forward exchange rate of the dollar in terms of pounds is less than the spot exchange rate,

• A)inflation must be lower in the United States than in Britain.
• B)inflation must be higher in the United States than in Britain.
• C)market participants must be expecting the dollar to appreciate against the pound.
• D)market participants must be expecting the dollar to depreciate against the pound.

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