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Question
You can buy or sell the spot at $1.98 to the pound. You can buy or sell the pound one-year forward at $2.01 to the pound. If U.S. annual interest rates are 5%, what must be the approximate one-year British interest rate if interest rate parity holds?
A. 4.00%
B. 5.25%
C. 2.75%
D. 3.48%
E. 5.65%
Answer
This answer is hidden. It contains 29 characters.
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