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STEP: 1 of 3 Suppose that the she-month interest rate in the United States is 3%, while the six-month interest rate in Britain is 6%.

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STEP: 1 of 3 Suppose that the she-month interest rate in the United States is 3%, while the six-month interest rate in Britain is 6%. Further, assume the spot rate of the pound is 1.25 According to interest rate parity (IRP), the forward rate premium of the pound with respect to the U.S. dollar should be annualized) (not

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