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A global investor gathered information on currencies and interest rates in France and the United Kingdom as shown below: Discrete risk-free rate (France) 6.00% Discrete
A global investor gathered information on currencies and interest rates in France and the United Kingdom as shown below:
Discrete risk-free rate (France) 6.00% Discrete risk-free rate (United Kingdom) 4.00% Spot exchange rate per British pound 1.27 Market price of a 90-day futures contract on GBP () 1.28
As part of a possible arbitrage strategy:
Indicate whether to sell (short) or buy (long) the pound in the spot market:
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