The Spot Exchange Rate for the British Pound Is 0

question 104

Multiple Choice

The spot exchange rate for the British pound is 0.5 pounds/dollar. The one-year interest rate in the United States is 4% and the one-year interest rate in Britain is 5%. Based on these rates, what one-year forward exchange rate is consistent with the absence of arbitrage?

• A) 0.606 pounds/dollar
• B) 0.612 pounds/dollar
• C) 0.617 pounds/dollar
• D) 0.505 pounds/dollar

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Definitions:

Real-Life Crimes

Criminal acts that have occurred in reality, often documented and sometimes adapted into various media forms such as books, films, or television shows.

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Biological material collected for genetic analysis to identify, profile, or compare genetic information.

C.S.I. Effect

The phenomenon where the exaggerated portrayal of forensic science on crime television shows influences public perception and jury expectations in real-life courtrooms.

Real-Life Crimes

Criminal activities or incidents that have occurred in reality, as opposed to those depicted in fiction or media.