The spot exchange rate in New York is 1.600 dollars per British pound. The 360-day...
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The spot exchange rate in New York is 1.600 dollars per British pound. The 360-day forward exchange rate Is 1.680 dollars per pound. The one-year interest rate in Great Britain is 296 while the one-year interest rate in the United States is 4%. An American investor with $40.000 decides to take advantage of the differences in rates. Ignoring transaction costs, how can the American investor exploit the disequilibrium7 Compare the amount of money the investor will have at the end of the year if he or she Invests in one-year US securities vs. one-year British securities
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