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Suppose the interest rate on 6-month treasury bills is 8 percent per year in the United Kingdom and 4 percent per year in the United
Suppose the interest rate on 6-month treasury bills is 8 percent per year in the United Kingdom and 4 percent per year in the United States. Also, todays spot exchange price of the pound is $2.00 while the 6-month forward exchange price of the pound is $1.98. If the price of the 6-month forward pound were to _____, U.S. investors would see no return difference between covered U.K. investment and domestic U.S. investment. a.fall to $1.97 b.fall to $1.96 c.rise to $1.99 d.rise to $2.01
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