If the Spot Exchange Rate Between Dollars and Pounds Is

question 6

Multiple Choice

If the spot exchange rate between dollars and pounds is equal to 2 dollars for one pound and the forward exchange rate equals 2.10 dollars for one pound,then

• A)the dollar is trading at a forward premium.
• B)the pound is trading at a forward discount.
• C)the pound is trading at a forward premium.
• D)the market presents an opportunity for arbitrage.

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