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

question 1

Multiple Choice

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

• A)1.92
• B)1.89
• C)1.94
• D)1.90

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