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Business, 18.02.2020 02:49 zania30

Assume the following: you have $10,000 to invest; the current spot rate of British pounds is $1.800; the 90-­‐day forward rate of the pound is $1.780; the annual interest rate in the U. S. is 4%; the annual interest rate in the U. K. is 6%. (a) Where would you invest your $10,000 to maximize your yield with no foreign exchange risk? (b) Given the spot rate, the forward rate, and the U. S. interest rate, what is the equilibrium U. K. interest rate?

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Assume the following: you have $10,000 to invest; the current spot rate of British pounds is $1.800;...
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