ASTI BM1917 QUIZ ON FOREIGN EXCHANGE MARKET NAME: SECTION: DATE: SCORE: Short Case: Two countries, Great Britain and the United States, produce just one good: beef. Suppose the price of beef in the United States is $2.80 per pound and in Britain it is $3.70 per pound. a. According to PPP theory, what should the dollar/pound spot exchange rate be? Answer: b. Suppose the price of beef is expected to rise to $3.10 in the United States and to $4.65 in Britain. What should the one-year forward dollar/pound exchange rate be? Answer c. Given your answers to parts a and b, and given that the current interest rate in the United States is 10 percent, what would you expect the current interest rate to be in Britain