Assume That Interest Rate Parity Holds

question 20

Multiple Choice

Assume that interest rate parity holds. The U.S. interest rate is 13 percent and the British interest rate is 10 percent. The forward rate on British pounds exhibits a ____ of ____ percent.​

• A) ​discount; 2.73
• B) ​premium; 2.73
• C) ​discount; 3.65
• D) ​premium; 3.65

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