investor invests in a British CD offering a six-month interest rate of 5%. Over this six-month period, the pound depreciates by 9%. Calculate the…

A U.S. investor invests in a British CD offering a six-month interest rate of 5%. Over this six-month period, the pound depreciates by 9%. Calculate the effective yield on the British CD for the U.S. investor. Show how you derive the answer.

Effective Yield (in pounds) = (1+i/n)^n-1Where,N is number of times compounding happens.Since CD is for six months, the compounding happens twice a yearR = (1+5%/2)^2-1 = 5.062%Effective Yield…