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3) From a recent trip, you recall a spot exchange rate of $3.65 = 3 and 1-year forward rate of 3=S3.75. a) Suppose that

3) From a recent trip, you recall a spot exchange rate of $3.65 = £3 and 1-year forward rate of £3-S3.75. a) Suppose that the

3) From a recent trip, you recall a spot exchange rate of $3.65 = 3 and 1-year forward rate of 3=S3.75. a) Suppose that the interest rates are 3% APR in the UK. Under IRP, what is the no-arbitrage 1-year interest rate in the US? Round to 4 decimal places. b) What is forward annualized holding period return, round to 4 decimal places?

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