Suppose That the One-Year Forward Rate on Pounds Is $1

question 62

Multiple Choice

Suppose that the one-year forward rate on pounds is $1.75£. Given no arbitrage opportunities,this implies that traders expect:

• A) the spot rate to be $1.75£ in one year.
• B) the spot rate to be greater than $1.75£ in one year.
• C) the spot rate to be less than $1.75£ in one year.
• D) the spot rate to be greater than or equal to $1.75£ in one year.
• E) the spot rate to be less than or equal to $1.75£ in one year.

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A condition persisting for a long time or constantly recurring, often referring to diseases or health conditions.

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