6. An Investor has 20000 and faces an interest of 5% in the Euro Zone or he could his Euro for pound sterling at the spot exchange rate and invest in UK market which gives interest of 15%

The following are currency exchange rates

1.00=$1.50 and 1.00==$1.20 which makes the spot cross rate 1.25=1.00

Find out a) the IRP forward rate of vs and b) how much he will earn extra if invested in UK market? ( 5marks ) (Marking Scheme;; 1mark for correct answer and 4 marks for calculation=5 marks)