Suppose 90-Day Investments in Britain Have a 6

Multiple Choice

Suppose 90-day investments in Britain have a 6.00% annualized return and a 1.50% quarterly (90-day) return.In the U.S. ,90-day investments of similar risk have a 4.00% annualized return and a 1.00% quarterly (90-day) return.In the 90-day forward market,1 British pound equals $1.70.If interest rate parity holds,what is the spot exchange rate ($/£) ? Do not round the intermediate calculations and round the final answer to four decimal places.

A) $1.7084
B) $1.8280
C) $1.8109
D) $1.8793
E) $2.0159