Question 2 a) Amy construction Ltd imports goods from Chicago to the value of $90,000. Payment is cash on delivery. What is the cost in sterling of the purchase, given that the exchange rate quote $/ 1.3500 1.4500. Where 1.3500 is the bid price and 1.4500 is the ask price.

b) As a US investor willing to invest $1,000,000 with the information given below: Spot rate of =$1.60 180-day forward rate of =$1.56 180-day British interest rate = 4% 180-day US interest rate = 3% a) Is the Covered Interest Arbitrage by the investor feasible? Explain