If the forward exchange rate in Example 25.1 had been F0 = $1.35/£ when the investment was made, the U.S. investor could have assured a riskless dollar-denominated return by arranging to deliver the £11,000 at the forward exchange rate of $1.35/£. In this case, the riskless U.S. return would have been 6.07%:

[1 + rf

 (UK)]F0/ E0 = (1.10)1.35/1.40 = 1.0607? L042