Interest Rate Parity with bid-ask spreads Suppose: Spot rate S = $1.5080 - $1.5095 / Six month Forward rate F. $1.5280 - 1.5292/ Interest rate in US = 4.6% -4.8% Interest rate in UK = 3.0% -3.3% 1.6+6 With bid-ask rates and borrowing-lending rates, is arbitrage profit possible if you start with $1 million in part (a) and 1 million in part (b)? Do it both ways: (a) borrow $ 1 million in US and invest overseas and (b) borrow 1 million in UK and invest in US