If the Interest Rate Is Higher in the U

question 95

Multiple Choice

If the interest rate is higher in the U.S. than in the United Kingdom, and if the forward rate of the British pound (in U.S. dollars) is the same as the pound's spot rate, then:

• A) U.S. investors could possibly benefit from covered interest arbitrage.
• B) British investors could possibly benefit from covered interest arbitrage.
• C) neither U.S. nor British investors could benefit from covered interest arbitrage.
• D) A and B

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Definitions:

Fourteen Points

The Fourteen Points were a set of diplomatic principles proposed by President Woodrow Wilson in 1918 as a basis for peace negotiations to end World War I.

Woodrow Wilson

The 28th President of the United States, serving from 1913 to 1921, known for his leadership during World War I and for advocating the League of Nations.

Peace Conference

A meeting aimed at resolving conflicts and establishing peace between nations or groups.

International Diplomacy

The conduct of negotiations and the management of relations between nations by official representatives and diplomats.