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43 Currently, the GBP/USD rate is 1.5041 and the six-month forward exchange rate is 1.5220. The six-month interest rate is 7.2% per annum in the
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Currently, the GBP/USD rate is 1.5041 and the six-month forward exchange rate is 1.5220. The six-month interest rate is 7.2% per annum in the U.S. and 5.6% per annum in the U.K. Assume that you can borrow 1,000,000 or its equivalent in USD. How much do you make/lose if you borrow the foreign currency and invest locally? (USD, no cents)
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