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Suppose that you are an investor having 100 000$ choosing between investing either in London...

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Finance

Suppose that you are an investor having 100 000$ choosing between investing either in London or in New York.

The interest rate on British pounds is 12% in London, and the interest rate on a comparable U.S. dollar investment in New York is 7%. The British pound spot rate is $1.95, and the one-year forward rate is $1.87.

What would the one year gain if you decide to place the 100 000 usd in London with a 12% interest rate taking into account The British pound spot rate is $1.95, and the one-year forward rate is $1.87.?

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