The following is market information: Current spot rate of pound = $1.45 90-day forward rate of pound = $1.46 3-month deposit rate...

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Finance

The following is market information:
Current spot rate of pound
=
$1.45
90-day forward rate of pound
=
$1.46
3-month deposit rate in U.S.
=
1.1%
3-month deposit rate in Great Britain
=
1.3%
If you have $250,000 and use covered interest arbitrage for a90-day investment, what will be the amount of U.S. dollars you willhave after 90 days?

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Transcribed Image Text

The following is market information:Current spot rate of pound=$1.4590-day forward rate of pound=$1.463-month deposit rate in U.S.=1.1%3-month deposit rate in Great Britain=1.3%If you have $250,000 and use covered interest arbitrage for a90-day investment, what will be the amount of U.S. dollars you willhave after 90 days?

Current spot rate of pound	=	$1.45
90-day forward rate of pound	=	$1.46
3-month deposit rate in U.S.	=	1.1%
3-month deposit rate in Great Britain	=	1.3%