Business, 05.11.2019 00:31 jetblackcap

You have $4,000. the current interest rates on dollar- and pound-denominated deposits for 180-day maturity are i $ =0.02 and i £ =0.03, respectively. the current spot exchange rate is e=$2/£. assume that you don’t mind bearing foreign exchange risk. you expect the spot rate in 180 days to be $1.90/£. what strategy would you follow, and why? after 180 days, the actual spot rate turns out to be $1.80/£. are you with your decision?

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You have $4,000. the current interest rates on dollar- and pound-denominated deposits for 180-day ma...

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