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1. Suppose that the U.S. dollar-pound sterling spot exchange rate equals $1.60/, while the 6-month...

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1. Suppose that the U.S. dollar-pound sterling spot exchange rate equals $1.60/, while the 6-month forward rate is $1.64/ E. The yield on a one-year U.S. treasury bill is 8% and that on a one-year U.K. treasury bill is 6%. Calculate the covered interest Differential for the 6-month investment, treating U.S as the home country. On the basis of this result, which country would you expect to face capital inflows and which to face capital outflows

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