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Consider a Dutch investor with 1,000 euros to place in a bank deposit in either the Netherlands or Great Britain. The one-year interest rate on

image text in transcribed Consider a Dutch investor with 1,000 euros to place in a bank deposit in either the Netherlands or Great Britain. The one-year interest rate on bank deposits is 1% in Britain and 5% in the Netherlands. The one-year forward euro-pound exchange rate is 1.65 euros per pound and the spot rate is 1.5 euros per pound. Answer the question using the exact equations for uncovered interest parity (UIP) and covered interest parity (CIP) as necessary. b. What is the riskless euro-denominated return on British deposits for this investor using forward cover

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