The One-Year Forward Rate for the British Pound Is £0

question 35

Multiple Choice

The one-year forward rate for the British pound is £0.6781 = $1.The spot rate is £0.6789 = $1.The interest rate on a risk-free asset in the UK is 4.6 percent.If interest rate parity exists,what is the one-year risk-free rate in the U.S.?

• A)4.68 percent
• B)4.72 percent
• C)4.77 percent
• D)4.83 percent
• E)4.87 percent

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