1)- advise a risk-avert individual who is to invest $50 million for one year either in the U.S. or in U.K. Given the following information, where would you advise her/him to invest? iu.s. = 5%; iu.k. = 4%; Spot exchange rate =1.5 dollars per pound; and the one year forward exchange rate = 1.3 dollars per pound.
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Considering the spot exchange rate and the forward rate, there is a discount in the forward exchange rate... View the full answer