Assume that interest rate parity (IRP) exists. Assume this information provided by today's Wall Street Journal:
Spot rate of British pound = $1.80
6-month forward rate of pound = $1.82
12-month forward rate of pound = $1.78
a. Is the annualized 6-month U.S. risk-free interest rate above, below, or equal to the British risk-free interest?
b. Is the 12-month U.S. risk-free interest rate above, below, or equal to the British risk-free interest rate?