Use the Information for the Question(s)below

question 24

Multiple Choice

Use the information for the question(s) below.
The current spot exchange rate,S,is $1.8862/£.Suppose that the yield curve in both countries is flat.The risk-free rate on dollars,r$,is 5.35% and the risk-free interest rate on pounds,r£,is 4.80%.
-Using the covered interest parity condition,the calculated three-year forward rate F3 is closest to:

• A)$1.8568/£.
• B)$1.9161/£.
• C)$1.8961/£.
• D)$1.8764/£.

---

Definitions:

Medial Forebrain Bundle

A neural pathway in the brain involving the transmission of dopamine and implicated in the regulation of pleasure and reward.

Reticular Formation

The reticular formation is a complex network of nerve pathways in the brainstem involved in consciousness, sleep-wake cycles, and mediating overall levels of arousal.

Corpus Callosum

A substantial group of nerve fibers that links the two brain halves, enabling communication between them.

Cerebral Hemispheres

The two halves of the brain, each responsible for different functions and processes, with the left hemisphere often associated with language and the right with spatial abilities.