The One-Year Forward Rate of the British Pound Is Quoted

question 55

Multiple Choice

The one-year forward rate of the British pound is quoted at $1.60, and the spot rate of the British pound is quoted at $1.63. The forward ____ is ____ percent.

• A) discount; 1.9
• B) discount; 1.8
• C) premium; 1.9
• D) premium; 1.8

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Definitions:

Treasury Bills

Short-term government securities with maturity periods of one year or less, issued at a discount from their face value.

Optimal Weights

The best proportion of different assets in a portfolio to achieve maximum return for a given level of risk.

Expected Rate

The anticipated rate of return on an investment or asset, based on historical data or market forecasts.

Treasury Bills

Short-term government securities with maturity periods of one year or less, offering a secure, low-risk investment option.