Suppose the interest rate in the U.K. is 4% for 90 days
QUESTION
Fall 2003Suppose the interest rate in the U.K. is 4% for 90 days, the current spot rate is $2.00/pound, and the 90-day forward rate is $1.96/pound. If the covered interest rate parity holds, then the interest rate in the U.S. for 90 days is:
ANSWER:
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