If the current exchange rate is 1.00 = $1.75, the one-year forward rate is 1.00 = $1.85,

Question:

If the current exchange rate is £1.00 = $1.75, the one-year forward rate is £1.00 = $1.85, and the interest rate on UK £ deposits is 8% p.a., what is the riskless dollar-denominated return which can be locked in by an American depositing in the UK?

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...

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