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The yield on a 1-year bill in the U. K. is 7% and the present exchange rate is 1 pound = U. S. $1.65. If you expect the exchange rate to be 1 pound = U. S. $1.45 a year from now, the return a U. S. investor can expect to earn by investing in U. K. bills is a. 6.7% b. 3.2% c. 8% d. 5.97%

The yield on a 1-year bill in the U. K. is 7% and the present exchange rate is 1 pound = U. S. $1.65. If you expect the exchange rate to be 1 pound = U. S. $1.45 a year from now, the return a U. S. investor can expect to earn by investing in U. K. bills is a. 6.7% b. 3.2% c. 8% d. 5.97%

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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The yield on a 1-year bill in the U. K. is 7% and the present exchange rate is 1 pound = U. S. $1.65. If you expect the exchange rate to be 1 pound = U. S. $1.45 a year from now, the return a U. S. investor can expect to earn by investing in U. K. bills is

 

a. 6.7%

b. 3.2%

c. 8%

d. 5.97%

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