Consider the following situation. It costs $1.2900 to purchase £1 for immediate delivery. UK interest rates are 0.75% p.a. US interest rates are 1.5% p.a. What must be the 1 year forward rate at which...

Consider the following situation.<br>It costs $1.2900 to purchase £1 for immediate delivery.<br>UK interest rates are 0.75% p.a.<br>US interest rates are 1.5% p.a.<br>What must be the 1 year forward rate at which you can purchase £ with $? Assume that there is no<br>default risk, no transaction costs, no bid-ask spreads, etc.<br>Provide your answer to 4 decimatplaces, for example, if you think the answer is 1.2900 $/£, enter<br>'1.2900'<br>Answer:<br>

Extracted text: Consider the following situation. It costs $1.2900 to purchase £1 for immediate delivery. UK interest rates are 0.75% p.a. US interest rates are 1.5% p.a. What must be the 1 year forward rate at which you can purchase £ with $? Assume that there is no default risk, no transaction costs, no bid-ask spreads, etc. Provide your answer to 4 decimatplaces, for example, if you think the answer is 1.2900 $/£, enter '1.2900' Answer:

Jun 09, 2022

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Consider the following situation. It costs $1.2900 to purchase £1 for immediate delivery. UK interest rates are 0.75% p.a. US interest rates are 1.5% p.a. What must be the 1 year forward rate at which...

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