Suppose the 1-Year Risk-Free Rate of Return in the U

question 3

Multiple Choice

Suppose the 1-year risk-free rate of return in the U.S.is 5%.The current exchange rate is 1 pound = U.S.$1.60.The 1-year forward rate is 1 pound = $1.57.What is the minimum yield on a 1-year risk-free security in Britain that would induce a U.S.investor to invest in the British security

• A)2.44%
• B)2.50%
• C)7.00%
• D)7.62%
• E)None of the options

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Definitions:

Organizational Structure

The way in which a company or organization is organized, including the roles, responsibilities, and communication systems that govern how its activities are directed towards achieving its objectives.

Central Authority

The governing body or group at the highest level of organizational hierarchy, responsible for making major decisions.

Functional

Pertains to the practical or essential aspects of something, often referring to specific roles in a business or organization.

Organizational Structure

The system that outlines how certain activities are directed to achieve the goals of an organization, defining roles, responsibilities, and relationships.