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6. The spot Dollar-GBP sterling exchange rate is $1.80 per pound. The U.S. and U.K. 1-year simple interest rates are 4% and 2% respectively. The

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6. The spot Dollar-GBP sterling exchange rate is $1.80 per pound. The U.S. and U.K. 1-year simple interest rates are 4% and 2% respectively. The futures price for delivery in one year is $1.86 per pound. Compute the arbitrage-free futures price and provide an arbitrage trading strategy in the following table. Transactions Payoff at 0 Payoff in 1 year Net

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