Homework Assignment 6 - Leeds School of Business

This gives a value of 114.18. Thus the return in US dollars is 14.18%. The six-month forward rate between the British pound and the US dollar is $1.75 per pound. If six-month interest rates are 3% in the United States and 150 basis points higher in England, what is the current exchange rate? Spot rate 1.75 (1.045/1.03)^0.5 $1.762/£ ................
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