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You have $250,000 to invest for 1-month. Suppose 1-month US interest rate is 4.5% per year and 1-month UK interest rate is 5.5% per year.
You have $250,000 to invest for 1-month. Suppose 1-month US interest rate is 4.5% per year and 1-month UK interest rate is 5.5% per year. The current spot rate is 1.6789/ and 1-month forward rate is 1.6702. You want to avoid any possible exchange risk. Which market would maximize your investment return?
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