The Yield on a 1-Year Bill in the U

question 34

Multiple Choice

The yield on a 1-year bill in the U.K. is 8%, and the present exchange rate is 1 pound = U.S. $1.60. If you expect the exchange rate to be 1 pound = U.S. $1.50 a year from now, the return a U.S. investor can expect to earn by investing in U.K. bills is

• A) −6.7%.
• B) 0%.
• C) 8%.
• D) 1.25%.
• E) None of the options are correct.

---

Definitions:

Increase Or Decrease

A phrase referring to the action of becoming larger or smaller in size, amount, intensity, or degree.

Natural Selection

The process by which organisms that are better adapted to their environment tend to survive and produce more offspring.

Directly

in a straightforward or immediate manner.

Populations

Groups of individuals belonging to the same species that live in the same geographical area and have the capability of interbreeding.