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Assume that the spot and 1-year forward rates for the British pound are $1.60 and $1.55, respectively, and are $0.90 and $0.92 per euro, respectively.
Assume that the spot and 1-year forward rates for the British pound are $1.60 and $1.55, respectively, and are $0.90 and $0.92 per euro, respectively. If interest rates are 4 percent in the United States, 6 percent in Britain, and 3 percent in Germany, where can you get the best return on a covered 1-year investment?
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