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13 Exchange rate forward: Suppose that the riskless borrowing rate in the UK is u and that in the USA is r. A dollar investor

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13 Exchange rate forward: Suppose that the riskless borrowing rate in the UK is u and that in the USA is r. A dollar investor wishes to set the exchange rate, Ct, in a forward contract in which the two parties agree to exchange C1 dollars for one pound at time T. If a pound is currently Co dollars, what is the fair value of C? 13 Exchange rate forward: Suppose that the riskless borrowing rate in the UK is u and that in the USA is r. A dollar investor wishes to set the exchange rate, Ct, in a forward contract in which the two parties agree to exchange C1 dollars for one pound at time T. If a pound is currently Co dollars, what is the fair value of C

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