Suppose That If the 3-Month Interest Rate on Dollars Is 2% (Effective

question 80

Multiple Choice

Suppose that: $$\begin{array}{l}\begin{array} {lll } \text {U.K. (pound) }&\frac { \text { Spot Rate } } { 1.4994 }&\frac { 3 \text { Month Forward Rate } } { 1.491 }&\frac { 1 \text { Year Forward Rate } } { 1.4658 }\end{array}\end{array}$$ If the 3-month interest rate on Dollars is 2% (effective annual rate) , what do you think is the 3-month sterling (U.K.) interest rate?

• A)1.07%
• B)2.07%
• C)3.07%
• D)4.07%

---

Definitions:

Tangible Assets

Physical assets that have a form you can touch or handle, like buildings, machinery, and land.

Acquirer

The entity that obtains control of another entity (acquiree) in a business combination, typically through the purchase of its equity interests or assets.

Negative Goodwill

Occurs when the price paid for an acquisition is less than the fair market value of its net tangible assets, often recognized as a gain in the acquirer's financial statements.

Consolidated SFP

Consolidated Statement of Financial Position; a financial statement that presents the total assets, liabilities, and equity of a parent company and its subsidiaries as one single entity.