Assume the Spot Rate for the British Pound Currently Is

question 8

Multiple Choice

Assume the spot rate for the British pound currently is £0.6211 per $1.Also assume the one-year forward rate is £0.6347 per $1.A risk-free asset in the U.S.is currently earning 3.4 percent.If interest rate parity holds,what rate can you earn on a one-year risk-free British security?

• A)1.18 percent
• B)1.57 percent
• C)3.67 percent
• D)5.66 percent
• E)5.92 percent

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Definitions:

Criminal Activity

Acts that violate laws and are punishable by the state, ranging from minor offenses to serious crimes.

Informal Punishment

Punitive actions or sanctions that are not officially sanctioned by law but occur through social or community norms and practices.

Formal Punishment

A system of penalties imposed by institutions or organizations to enforce rules and discourage misconduct.

Capital Punishment

The legal authorization to put someone to death as a penalty for a crime.