Suppose 90-day investments in Britain have a 6% annualized return and a 1.5% quarterly (90-day) return. In the U.S., 90-day inve

Question

3 years ago

14

Suppose 90-day investments in Britain have a 6% annualized return and a 1.5% quarterly (90-day) return. In the U.S., 90-day inve

stments of similar risk have a 4% annualized return and a 1% quarterly (90-day) return. In the 90-day forward market, 1 British pound equals $1.65. If interest rate parity holds, what is the spot exchange rate?

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1 answer:

Vilka [71] · Answer 1 · 2021-11-25T10:59:33+03:00

Vilka [71]3 years ago

5 0

Answer:

1 pound = $1.6582

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