Question: Suppose the spot exchange rate is $ 1 = . 7 2 3 0 and the 1 - month forward rate is $ 1 =

Suppose the spot exchange rate is $1=.7230 and the 1-month forward rate is $1=.7229. Given this, you know the:
Multiple Choice
pound is selling at a premium.
pound is selling at a discount.
U.S. real risk-free interest rate is higher than the U.K.s.
U.S. inflation rate is higher than the U.K.s.
U.S. nominal interest rate is higher than the U.K.s.

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