Kizspy Question: 39
(Choose 1 answer)
Assume interest rate parity exists. If the spot rate on the British pound is $2 and the 1-year British interest rate
is 7 percent, and the 1-year U.S. interest rate is 11 percent, what is the pound's forward discount or premium?
A. 3.74 percent premium
B. 3.74 percent discount
C. 3.60 percent premium
D. 3.60 percent discount
