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

question 13

Multiple Choice

The one-year forward exchange rate for the British Pound is $1.90/Pound.If the one-year U.S.interest rate is 4% and the one-year British interest rate is 6%,compute the implied spot exchange rate in $/Pound.

• A)1.89
• B)1.90
• C)1.92
• D)1.94

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