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An American firm owes 6,310,659 British pounds payable in one year. The current spot rate is 1.428 per pound. A UK bank is paying 3.9%

An American firm owes 6,310,659 British pounds payable in one year. The current spot rate is 1.428 per pound. A UK bank is paying 3.9% on deposits or will lend at 4.1%. A US bank is paying 5.3% on deposits or will lend at 6.4%. The firm will hedge this exposure with money market hedging. What is the effective exchange rate?

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