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S0 = $1.2314/ S0 = 0.9278/$ S0 = $1.0778/ E (S1 (3-months)) = $1.1980/ F3-months = $1.2680/ Where: = euro; = British pound; E (

S0 = $1.2314/ S0 = 0.9278/$ S0 = $1.0778/

E (S1 (3-months)) = $1.1980/ F3-months = $1.2680/

Where: = euro; = British pound; E ( ) = Expected.

Do you think there is anything off or not right with the three-month forward rate given above for the pound? If yes, what is off or wrong with it?

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