Multiple Choice
Assume the annual British interest rate is above the annual US interest rate. Also assume the dollar's forward rate in pounds equals the dollar's spot rate. Given this information, interest rate parity ____ exist, and the US firm ____ lock in a lower financing cost by borrowing pounds for one year.
A) does; could
B) does; could not
C) does not; could not
D) does not; could
Correct Answer:
Verified
Correct Answer:
Verified
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