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Assume the following information: You have $500,000 to invest: Current spot rate of pound = $1.25 90-day forward rate of pound = $1.27 3-month deposit
Assume the following information: You have $500,000 to invest:
| Current spot rate of pound | = | $1.25 |
| 90-day forward rate of pound | = | $1.27 |
| 3-month deposit rate in U.S. | = | 3% |
| 3-month deposit rate in Great Britain | = | 3.5% |
If you use covered interest arbitrage for a 90-day investment, what will be the amount of U.S. dollars you will have after 90 days?
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