The Interest Rate Is 4% in the U

question 39

Multiple Choice

The interest rate is 4% in the U.K. and 3% in the U.S. for 90 days. The current spot rate is $2.00/£ and the forward rate is $1.96/£. If a U.S. based investor expects the spot rate to remain at $2.00/£ in 90 days, the expected uncovered interest rate differential would have to be _____ in favor of the _____ investment.

• A)2%; dollar
• B)2%; pound
• C)1%; dollar
• D)1%; pound

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Definitions:

Wire Mesh Mothers

A term from Harry Harlow's research on attachment, where infant monkeys showed attachment behaviors towards surrogate mothers made of wire mesh.

Harlow

A reference to Harry Harlow, an American psychologist known for his research on maternal-separation, dependency needs, and social isolation experiments on rhesus monkeys, highlighting the importance of caregiving and companionship.

Flavors

Distinctive tastes and aromas of food or drink, produced by various compounds.

Sweetness

A quality of having a pleasant or sugary taste.