Suppose That the One-Year U

question 58

Multiple Choice

Suppose that the one-year U.S.interest rate is 10%.If the one-year forward rate against the pound is $1.52 per pound and the spot exchange rate is $1.50 per pound,what must the equivalent British interest rate be according to the approximate covered interest parity?

• A) 8.67%
• B) 9.95%
• C) 10%
• D) 11.33%