Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Assume the following: (1) the interest rate on six-month treasury bills is 8 percent per annum in the United Kingdom and 4 percent
per annum in the United States; (2) today's spot price of the pound is $1.50, while the six-month forward price of the pound is
$1.485. If the price of the six-month forward pound were to then U.S. investors would no longer earn an extra return by
shifting funds to the United Kingdom.
O rise to $1.52
O rise to $1.55
O fall to $1.40
O fall to $1.47
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