Suppose that annual interest rates are 5% in the U.S. and 3% in the UK with the
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Question:
Suppose that annual interest rates are 5% in the U.S. and 3% in the UK with the 60-day forward rate for the pound at USD1.408/GBP. Then the current spot rate will be at a _______ of ________ to the forward rate, such that the interest rate parity condition is satisfied.
a.
discount, 0.331%.
b.
premium, 0.329%
c.
premium, 0.328%
d.
discount, 0.326%
Expert Answer:
Interest rate parity IRP is a theory in which the interest rate differential between two countries i... View the full answer
Related Book For 
Financial Markets and Institutions
ISBN: 978-0077861667
6th edition
Authors: Anthony Saunders, Marcia Cornett
Posted Date:
