Question
If the current exchange rate is $2/, the 1-year forward exchange rate is $2.1/, and the interest rate on British government bills is 8% per
If the current exchange rate is $2/, the 1-year forward exchange rate is $2.1/, and the interest rate on British government bills is 8% per year.
What risk-free dollar-denominated return can be locked in by investing in the British bills?
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Multinational Business Finance
Authors: David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett
10th Edition
0201785676, 9780201785678
