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1. (5 points) Suppose the dollars per pound spot rate is $1.31/ and the 12-month forward rate implies a forward discount of 4.00% on the
1. (5 points) Suppose the dollars per pound spot rate is $1.31/ and the 12-month forward rate implies a forward discount of 4.00% on the pound. What must be the 12-month forward rate? [hint: The pound is traded at a discount in the forward market, compared to spot trades]
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