you have $2000. The current interest rates on dollar and pound dominated deposits for 180 day maturity are 2% and 3%, restpectively. The current spot exchange rate is e=$2/1.

A. What are your three basic choices of strategy over the next 180 days?

B. If you( and everyone else) were certain that the exchange rate between dollars and pounds would not change over the next 180 days, what would you do? what would you have at the end of 180 days?

C. Now assume you are risk averse. The 180 day forward rate $2.02/1. What strategy do you follow