Suppose 90-Day Investments in Britain Have a 6% Annualized Return

Multiple Choice

Suppose 90-day investments in Britain have a 6% annualized return and a 1.5% quarterly (90-day) return.In the U.S.,90-day investments of similar risk have a 4% annualized return and a 1% quarterly (90-day) return.In the 90-day forward market,1 British pound equals $1.65.If interest rate parity holds,what is the spot exchange rate ($/£) ?

A) $1.4924
B) $1.6582
C) $1.8240
D) $2.0064
E) $2.2070