The spot rate is $2.00/ and the 90-day forward rate is $2.04/5. The investors expect the spot rate to remain unchanged in next 90-days. The interest rate on 90-day U.S. T-bills is 4% and the interest rate on 90-day British T-bills is 2.5%, an American investor who does not want to face exchange rate risk should 1. a. Invest in dollar-denominated assets. b. Invest in pound-denominated assets c. Forego use of the forward exchange rate market d. Not move dollars to the United Kingdom In the above question, how will the investor's action affect spot exchange rate and forward exchange rate? 2. 3, what is covered interest parity? (use math equation to express 4. The interest rate in the UK is 6% for 90 days, and the interest rate in the US, is 5%. The forward rate is $1.96/6. By investing in U.S. rather than in U.K., US investors would earn an extra return of 1%. Then the 90-day spot rate would have to be. The interest rate is 2% in the U K and 4.5% in the US for 90 days The spot rate is $2 00 and the 90-day forward rate is $1.96/5. If a U.S. based investor expects the spot rate to be $2.04/s in 90 days, the expected uncovered interest differential is in favor of the 5 investment