Suppose That the 1-Year Forward Rate of Dollar Per Pound

question 43

Multiple Choice

Suppose that the 1-year forward rate of dollar per pound is $1.32,the current spot rate $/pound is $1.20,and the expected future spot rate $/pound is $1.40.The expected premium on the pound is:

• A) -6.7%
• B) 5.7%
• C) 10%
• D) 16.7%

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