Use Interest Rate Parity to Answer This Question

question 59

True/False

Use interest rate parity to answer this question. A U.S. investor has a choice between a risk-free one-year U.S. security with an annual return of 4%, and a comparable British security with a return of 5%. If the spot rate is $1.43/£, the forward rate is $1.44/£, and there are no transaction costs, the investor should invest in the U.S. security.

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Definitions:

Collagen Fibers

Strong, fibrous proteins found in connective tissue, including skin, tendons, and ligaments, providing strength and elasticity.

Elastic Fibers

Protein fibers found in connective tissue, giving flexibility and resilience to organs and tissues.

Osteoporosis

A condition characterized by weakened bones that are more prone to fracture, due to reduced bone mass and deterioration of bone tissue.

Muscle Stress

Refers to the physical strain or damage that muscles undergo due to overexertion or overloading, often leading to soreness or injury.