Assume that the spot and one-year forward rates for the British pound are $1.60 and $1.55, respectively

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Assume that the spot and one-year forward rates for the British pound are $1.60 and $1.55, respectively and are $0.90 and $0.92 per euro, respectively. If interest rates are 4 percent in the United States, 6 percent in Britain, and 3 percent in Germany, where can you get the best return on a covered one-year investment?

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Financial Institutions, Markets And Money

ISBN: 1704

12th Edition

Authors: David S. Kidwell, David W. Blackwell, David A. Whidbee, Richard W. Sias

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