If the Spot Rate for the British Pound Is $1

question 22

Multiple Choice

If the spot rate for the British pound is $1.5077 and the 180-day forward rate is $1.4934, what is the approximate annualized forward premium (discount) ?

• A) premium of 1.90%
• B) premium of 0.97%
• C) discount of (-)1.90%
• D) discount of (-)0.97%

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Definitions:

Umbilical Vein

The blood vessel in a developing embryo and fetus that carries oxygenated blood from the placenta to the growing baby.

Ligamentum Venosum

A fibrous remnant of the fetal ductus venosus that connects the left branch of the portal vein to the inferior vena cava.

Ligamentum Arteriosum

A small ligament that is the remnant of the ductus arteriosus formed within three weeks after birth.

Ligamentum Teres

A round ligament of the hip joint that connects the femur and the acetabulum, playing a role in hip stabilization.