A $5000 bill with a $50 coupon in the US is currently selling at $4750, and a 10,000 British Pound bill with a 100 Pound coupon is trading for 9800 Pounds. Both mature in 1 year. The US Dollar is currently trading at .65 Pounds. If uncovered interest parity holds, the market believes the dollar will trade at ____ Pounds in 1 years’ time. (Round to the nearest 2 decimal points)

Answer rating: 100% (QA)

We can use the uncovered interest parity formula to solve for the expected exchange rate 1 rUS 1 rUK ... View the full answer