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1. The spot GBP/USD exchange rate is 0.5025/USD, and the one-year forward rate is GBP 0.5048/USD. If the annual interest rate on dollar CDs is

1. The spot GBP/USD exchange rate is 0.5025/USD, and the one-year forward rate is GBP 0.5048/USD. If the annual interest rate on dollar CDs is 6 percent, what would you expect the annual interest to be on GBP CDs?

A. 5.52 percent

B. 6.49 percent

C. 3.55 percent

D. 8.25 percent

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