The following numbers exist in current market place:
One-year forward rate for the pound: $1.6
Current spot rate for the pound: $1.5
One-year interest rate in the UK: 5%
One-year interest rate in the US: 8%
Which is the correct statement in the following?
a. The US interest rate is most likely to go down.
b. These numbers represent an equilibrim condition.
c. The spot rate is most likely to go down.
d. The forward rate is most likely to go down.
e. The forward rate is most likely to go up.