Suppose the spot USD-GBP rate is 1.2510-15 and the one-year swap points are 16/15. Then:

 

1. The pound is at a one-year discount to the dollar 2. The dollar is at a one-year discount to the pound 3. The pound is at a one-year premium to the dollar 4. The dollar is at a one-year premium to the pound

A) 1 and 4 only B) 2 and 3 only C) 1 only D) 2 only