The 1-Year Forward Rate for the British Pound Is £0

question 22

Multiple Choice

The 1-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 U.K. is 4.6 percent. If interest rate parity exists, what is the 1 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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Definitions:

Sagittal

Relating to or denoting an anatomical plane that divides the body into right and left parts, typically used in medical and biological contexts.

Lambdoid

Pertaining to the lambdoidal suture, the cranial suture between the parietal bones and the occipital bone.

Coronal

Pertaining to the plane dividing the body into anterior and posterior portions, also referred to as the frontal plane.

Deviated Septum

A condition where the nasal septum, the bone and cartilage dividing the nasal cavity, is off-center or crooked, often causing breathing difficulties.