Assume That Interest Rate Parity Holds

question 7

Multiple Choice

Assume that interest rate parity holds. U.S. interest rate is 13% and British interest rate is 10%. The forward rate on British pounds exhibits a ____ of ____ percent.

• A) discount; 2.73
• B) premium; 2.73
• C) discount; 3.65
• D) premium; 3.65

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