Suppose 90-Day Investments in Britain Have a 6% Annualized Return

question 30

Multiple Choice

Suppose 90-day investments in Britain have a 6% annualized return and a 1.5% quarterly (90-day) return.In Canada,90-day investments of similar risk have a 4% annualized return and a 1% quarterly (90-day) return.In the 90-day forward market,1 British pound equals $1.96.If interest rate parity holds,what is the spot exchange rate?

• A)1 pound = $1.9700
• B)1 pound = $1.8582
• C)1 pound = $1.4308
• D)1 pound = $0.8500

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Definitions:

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A region of the brain within the parietal lobe responsible for processing sensory input from the body, such as touch, temperature, and pain.

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External or internal factors that are detected by sensory receptors, leading to specific physiological or psychological responses.

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How the presence or actions of others affect an individual's behavior, thoughts, and feelings.

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A species of owl known for its distinctive heart-shaped face and primarily nocturnal habits, often found in rural areas and open woodlands across various parts of the world.