Multiple Choice
The Wall Street Journal indicated, in its issue of Friday, November 9, 2012, that, in late trading on Thursday, November 8, 2012, the spot U.K. pound was selling at a price of $1.5983 per pound. At the same time, the six-months forward U.K. pound was selling at a price of $1.5974 per pound. Observation of these rates indicates that the U.K. pound was selling at a six-months forward __________ against the dollar, and, if covered interest parity had indeed been attained at that time, the conclusion could validly be reached that interest rates in the United Kingdom were __________ than comparable interest rates in the United States.
A) premium; lower
B) premium; higher
C) discount; lower
D) discount; higher
Correct Answer:
Verified
Correct Answer:
Verified
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