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Suppose that the current spot exchange rate is 0.80/$ and the three-month forward exchange rate is 0.7813/$. The three-month interest rate is 5.60 percent per
Suppose that the current spot exchange rate is 0.80/$ and the three-month forward exchange rate is 0.7813/$. The three-month interest rate is 5.60 percent per annum in the United States and 5.40 percent per annum in France.
Assume that you can borrow up to $1,000,000 or 800,000. determine your profit in terms of U.S. dollars.
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