What Can Be Said About the Spot Exchange Rate of Dollars

question 31

Multiple Choice

What can be said about the spot exchange rate of Dollars for pounds if nominal interest rates are higher in Canada than in Great Britain?

• A)It should exceed the forward rate of Dollars for pounds
• B)It should be less than the forward rate of Dollars for pounds
• C)It is expected to increase
• D)It is expected to remain constant

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Definitions:

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