10) Suppose that the effective return to a U.S. investor from buying a U.K. bond is 5.55%. Forward and spot exchange rates ($/£) are 2.10 and 2.00 respectively. The interest rate on the U.K. bond is most likely equal to: A) 5.45% B) 5.500% C) 5.650% D) 5.60%

Answer rating: 100% (QA)

To find the interest rate on the UK bond we can use the concept of covered interest rate p... View the full answer