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scoundrel [369]
3 years ago
8

Assume interest rate parity exists. If the spot rate on the British pound is $2 and the 1-year British interest rate is 7 percen

t, and the 1-year U.S. interest rate is 11 percent, what is the pound's forward discount or premium?
Business
1 answer:
Aleks04 [339]3 years ago
5 0

Answer:

The pound's forward discount or premium is 3.74%

Explanation:

The current spot rate is 1 Pound = $2

The interest rate parity exists, then:

The forward rate:

1 Pound*1.07 = $2*1.11

1.07 Pound = $2.22

1 pound = $2.0748

The Premium in Pound = $2.0748 - $2

                                      = $0.0748

Premium rate = $0.0748/$2*100

                       = 3.74%

Therefore, The pound's forward discount or premium is 3.74%

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Answer: Core competency.

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3 years ago
If you wanted to withdraw $12,000 from a bank account at the end of each of the next 20 years, approximately how much would you
Marizza181 [45]

Answer:

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Explanation:

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Computation:

P = A[1-(1+r)⁻ⁿ]/r

P = 12,000[1-(1.06)⁻²⁰]/0.06

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Brand managers know that increasing promotional budgets eventually result in diminishing returns. The first one million dollars
lilavasa [31]

Answer:

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4 years ago
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Learn more about produce here:

brainly.com/question/16755022

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