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In December 2005, the spot exchange rate for the British Pound was $1.7188/. Suppose that at the same time the one-year interest rate in the

In December 2005, the spot exchange rate for the British Pound was $1.7188/. Suppose that at the same time the one-year interest rate in the United States was 4.85% and the one-year interest rate in Great Britain was 3.15%. Based on these rates, what forward exchange rate is consistent with no arbitrage?

A. $1.7471/
B. $2.6464/
C. $1.6909/
D. $1.1163/

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