1. A US money market mutual fund manager is looking for some profitable investment opportunities and observes the following one-year interest rates on government securities and exchange rates: r US = 12 per cent, r UK = 9 per cent, S = $1.50/£1, f = $1.6/£1, where S is the spot exchange rate and f is the forward exchange rate. Which of the two types of government securities would constitute a better investment? LO 13.5