The 6-Month Interest Rate on 180-Day U

question 5

Multiple Choice

The 6-month interest rate on 180-day U.S. Treasury bills is 7.64%. In the foreign exchange markets, the spot rate between U.S. dollars and British pounds is 1 pound = $1.5525. The 180-day (6-month) forward rate is 1 pound = $1.5188. Determine the expected rate of interest on 6-month British government debt securities, assuming interest rate parity between the dollar and pound exists.

• A) 13.52%
• B) 5.47%
• C) 7.31%
• D) 10.03%

---

Definitions:

Accrued Expense

Expenses that have been incurred but not yet paid, recognized in the period they occur rather than when payment is made.

Computer Technician

A professional responsible for the maintenance, repair, and proper functioning of computer hardware and software.

Invoice

A document issued by a seller to a buyer, indicating the products or services provided and the amount due.

Accrued Wages

Compensation that employees have acquired through work but still awaits disbursement by the employer.