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The following is market information: Current spot rate of pound = $1.45 90-day forward rate of pound = $1.46 3-month deposit rate...

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Finance

The following is market information:

Current spot rate of pound

=

$1.45

90-day forward rate of pound

=

$1.46

3-month deposit rate in U.S.

=

1.1%

3-month deposit rate in Great Britain

=

1.3%

If you have $250,000 and use covered interest arbitrage for a90-day investment, what will be the amount of U.S. dollars you willhave after 90 days?

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Transcribed Image Text

The following is market information:Current spot rate of pound=$1.4590-day forward rate of pound=$1.463-month deposit rate in U.S.=1.1%3-month deposit rate in Great Britain=1.3%If you have $250,000 and use covered interest arbitrage for a90-day investment, what will be the amount of U.S. dollars you willhave after 90 days?

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