The One-Year Forward Exchange Rate for the British Pound Is

question 66

Multiple Choice

The one-year forward exchange rate for the British Pound is $1.80/Pound. If the one-year U.S. interest rate is 4.5% and the one-year British interest rate is 6%, compute the implied spot exchange rate in $/Pound.

• A) $1.75/pound
• B) $1.79/pound
• C) $1.83/pound
• D) $1.88/pound