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Assume that you have the following information: ZAR: South African Rand; GBP: British pound sterling a.) What is the One-Year GBP Interest rate under parity
Assume that you have the following information: ZAR: South African Rand; GBP: British pound sterling a.) What is the One-Year GBP Interest rate under parity conditions? Assuming you have 8,000 GBP, show that it is in parity using the "box" method and show the return after 9 months investing in either the United Kingdom or South Africa. (3 POINTS) b.) If the One-Year ZAR rate was 4.75%, what would that mean? What are three things that are key to fully take advantage of these types of opportunities? (2 POINTS)
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