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2. The spot price of the British pound is currently $1.6. The risk-free interest rate on 1-year government bonds is 0.75% in the United States

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2. The spot price of the British pound is currently $1.6. The risk-free interest rate on 1-year government bonds is 0.75% in the United States and 1% in the United Kingdom. For this question assume you are a US based investor. (a) What must be the forward price of the pound for delivery 1 year from now? (b) How could an investor make risk-free arbitrage profits if the forward price was $1.65

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