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

question 2

Multiple Choice

The one-year forward exchange rate for the British Pound is $1.70/Pound.If the one-year U.S.interest rate is 5% and the one-year British interest rate is 6%,compute the implied spot exchange rate in $/Pound.

• A)1.69
• B)1.72
• C)1.75
• D)1.78

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Definitions:

Linguistic Determinism

The idea that language shapes and limits human thought processes and perceptions.

Telegraphic Speech

A stage in language development where toddlers combine a limited number of words to convey a message, mimicking the concise style of telegraphic messages.

Babbling

A stage in language development involving the production of sounds, combinations of sounds, and syllables that precede the formation of meaningful words.

Critical Period

A specific time during development when the presence or absence of certain experiences has a long-lasting impact on the individual.