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Suppose that annual interest rates are 5% in the U.S. and 3% in the UK with the 60-day forward rate for the pound at USD1.408/GBP.

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Suppose that annual interest rates are 5% in the U.S. and 3% in the UK with the 60-day forward rate for the pound at USD1.408/GBP. Then the current spot rate will be at a to the forward rate, such that the interest rate parity condition is satisfied of . discount 0.326% Ob discount, 0.331% Os premium, 0.329% Od premium, 0.32896

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