What does rate tell you about expected future spot rate

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Reference no: EM131923198

Problem

1. Assume the following exchange rates are quoted on a particular day: £1 = 3DM, £1 = $1.8 and $1 = 4DM. How can an investor with .elm make a riskless gain by buying and selling currency on the foreign exchanges?

2. If the forward rate of exchange is at a discount, what does this tell you about the expected future spot rate?

Reference no: EM131923198

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