Assume that a currency's spot and future prices are the same, and the currency's interest rate is higher than the UK rate. The actions of UK investors to lock in this higher foreign return would ____ the currency's spot rate and ____ the currency's futures price.
A) put upward pressure on; put upward pressure on
B) put downward pressure on; put upward pressure on
C) put upward pressure on; put downward pressure on
D) put downward pressure on; put downward pressure on

Question

Quizplus · Accepted Answer

The Answer of Assume that a currency's spot and future prices are the same, and the currency's interest rate is higher than the UK rate. The actions of UK investors to lock in this higher foreign return would ____ the currency's spot rate and ____ the currency's futures price.
A) put upward pressure on; put upward pressure on
B) put downward pressure on; put upward pressure on
C) put upward pressure on; put downward pressure on
D) put downward pressure on; put downward pressure on

Assume That a Currency's Spot and Future Prices Are the Same