If the Spot Rate of the British Pound Is $1

question 59

Multiple Choice

If the spot rate of the British pound is $1.50, and the one-year forward rate has a discount of 3 percent, the one-year forward rate is $____.

• A)1.50
• B)1.47
• C)1.55
• D)1.46
• E)None of the above

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Definitions:

IFRS

International Financial Reporting Standards, which are a set of accounting standards developed by the International Accounting Standards Board (IASB) that serve as a global framework for financial reporting.

Specialized Asset

An asset that is uniquely designed for a specific task or purpose, often resulting in limited alternative uses.

Executory Contract

A contract under which both parties to the agreement have unperformed obligations that remain to be fulfilled.

Lease

A contractual arrangement in which a lessee agrees to pay the lessor for the use of an asset for a specified period of time.