Exhibit 11.1 Assume the Following

question 194

Multiple Choice

Exhibit 11.1 Assume the following:
(1) the interest rate on 6-month treasury bills is 8 percent per annum in the United Kingdom and 4 percent per annum in the United States;
(2) today's spot price of the pound is $1.50 while the 6-month forward price of the pound is $1.485.
-Refer to Exhibit 11.1.If the price of the 6-month forward pound were to ____,U.S.investors would no longer earn an extra return by shifting funds to the United Kingdom.

• A) Rise to $1.52
• B) Rise to $1.53
• C) Fall to $1.48
• D) Fall to $1.47

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Definitions:

Standard Hours

The established amount of time required to perform a task under normal conditions.

Variance Reports

Documents that show the difference between planned and actual financial performance.

Internal Reports

Reports generated within an organization, intended for internal strategic decision-making and performance evaluation.

Labor Price Variance

The difference between the actual cost of labor and the standard or budgeted cost of labor over a period.