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Assume the Exchange Rate Is GBP 1

Question 127

Multiple Choice

Assume the exchange rate is GBP 1.35/USD, the US risk-free rate is 7.0 percent, and the UK risk-free rate is 3.0 percent. What is the implied one-year forward rate?


A) GBP 1.40/USD
B) GBP 1.35/USD
C) GBP 1.30/USD
D) GBP 1.25/USD
E) GBP 1.20/USD

Correct Answer:

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