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Assume That British Interest Rates Are Higher Than U

Question 30

Multiple Choice

Assume that British interest rates are higher than U.S. rates, and that the spot rate equals the forward rate. Covered interest arbitrage puts ____ pressure on the pound's spot rate and ____ pressure on the pound's forward rate.​


A) ​downward; downward
B) ​downward; upward
C) ​upward; downward
D) ​upward; upward

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