Multiple Choice
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%.
E) None of the options
Correct Answer:
Verified
Correct Answer:
Verified
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