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Question
Suppose the 1-year risk-free rate of return in the United States is 5% and the 1-year risk-free rate of return in Britain is 8%. The current exchange rate is $1 = ₤.50. A 1-year future exchange rate of __________ would make a U.S. investor indifferent between investing in the U.S. security and investing in the British security.
A. ₤.5150
B. ₤.5142
C. ₤.5123
D. ₤.4859
Answer
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Related questions
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Q:
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D. The answer cannot be determined from the information given.