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What must be the one-year forward exchange rate

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Question: Suppose all of the conditions in Problem hold except that the forward rate of exchange is also $1.75/£1. How could an investor take advantage of this situation?

Problem: If the interest rate in the United Kingdom is 8 percent, the interest rate in the United States is 10 percent, the spot exchange rate is $1.75/£1, and interest rate parity holds, what must be the one-year forward exchange rate?

Reference no: EM131632862

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