7. If the current exchange rate is $1.75/£, the 1-year forward exchange rate is $1.85/£, and the interest rate on British government bills is 8% per year, what risk-free dollar-denominated return can be locked in by investing in the British bills?

8. If you were to invest $10,000 in the British bills of Problem 7, how would you lock in the dollardenominated return?

9. Much of this chapter was written from the perspective of a U.S. investor. But suppose you are advising an investor living in a small country (choose one to be concrete). How might the lessons of this chapter need to be modified for such an investor?