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Q8.(8 pts). A U.S. investor has a choice between a risk-free one-year U.S. security with an annual return of 4%, and a comparable British security
Q8.(8 pts).A U.S. investor has a choice between a risk-free one-year U.S. security with an annual return of 4%, and a comparable British security with a return of 5%. If the spot rate is $1.43/, the one-year forward rate is $1.44/, and there are no transaction costs, the investor should invest in the U.S. security.(Hint: Use interest rate parity to answer this question)(Show your calculations!)
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