Suppose the British pound is currently trading for $1\mathrm{.}50$ US dollars in the spot

market, and the $180-$day forward rate is $1\mathrm{.}47$ $$/.$ Which currency is at a forward premium?

Which currency deposit should have a higher interest rate on a $180-$day certificate of deposit

$($CD$)?$ What should be the interest differential between the two CDs in annualized terms?

Answer rating: 100% (QA)

First lets determine which currency is trading at a forward premium The British pound GBP is at a fo... View the full answer