Suppose That the One-Year U

question 22

Multiple Choice

Suppose that the one-year U.S.interest rate is 4% and the equivalent one-year U.K.interest rate is 6%.According to the covered interest rate parity,there is a ________ on the British pound.

• A) 2% forward discount
• B) 2% forward premium
• C) 10% forward discount
• D) 10% forward premium