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Suppose the British pound is currently trading for 1 . 5 0 US dollars in the spot market, and the 1 8 0 - day

Suppose the British pound is currently trading for

1.50

US dollars in the spot

market, and the

180 -

day forward rate is

1.47

/ .

Which currency is at a forward premium?

Which currency deposit should have a higher interest rate on a

180 -

day certificate of deposit

(

) ?

What should be the interest differential between the two CDs in annualized terms?

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