​According to the IFE, If British Interest Rates Exceed U

question 42

Multiple Choice

​According to the IFE, if British interest rates exceed U.S. interest rates:

• A) ​the British pound's value will remain constant.
• B) ​the British pound will depreciate against the dollar.
• C) ​the British inflation rate will decrease.
• D) ​the forward rate of the British pound will contain a premium.
• E) ​today's forward rate of the British pound will equal today's spot rate.

---

Definitions:

Subrogation

The legal process by which one party steps into the shoes of another party, to pursue their rights against a third party, usually in insurance claims.

Indemnity

A contractual obligation of one party to compensate the loss incurred by another party due to the acts of the indemnitor or any other party.

Incontestability Clause

A clause in insurance policies that makes the policy non-contestable after it has been in force for a certain period, except under certain conditions.

Insurance Policy

A contract between an insurer and a policyholder that defines the claims which the insurer is legally required to pay.