23. If the spot rate of dollars per British pound is $2.02/, and the outright forward quote for 90 days is $1.91/, what is the forward premium or discount on the dollar? A) 5.45% discount B) 11.52% premium C) 10.89% discount D) 23.04% premium 24. Both covered and uncovered interest arbitrage are risky operations because even without default in the securities, returns are unknown until all transactions are complete. A) True B) False C) It depends on the interest rate 25. All forwards are settled through a clearinghouse, but futures contracts are not and are thus subject to (greater) risk. A) country B) exchange rate C) default D) none of the above 26. Isaac Paul Freeley is a currency speculator who enjoys "betting" on changes in the foreign currency exchange market. Currently the spot price for the British pound is $1.5758/ and the 1-month forward rate is $1.5801/. Isaac thinks the pound will move to $1.5843/ in the next month. If Isaac uses 200,000 today to speculate on the pound spot market, in one month he could earn a net profit of A) $860.00 B) $1,700.00 C) $840.00 D) $20,400.00