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Suppose that annual interest rates are 5% in the U.S. and 3% in the UK with the 60-day forward rate for the pound at USD1.408/GBP.

Suppose that annual interest rates are 5% in the U.S. and 3% in the UK with the 60-day forward rate for the pound at USD1.408/GBP. What will the
current spot rate? Determine the forward rate, if the interest rate parity condition is satisfied.

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