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The spot exchange rate is $1.40 per pound. The interest rates in US and UK...

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Finance

The spot exchange rate is $1.40 per pound. The interest rates in US and UK are 1% and 3% respectively. An investor borrows $1000 US dollars, converts the amount into pounds and invests in a pound denominated bond.

How many pounds does the investor gets for $1,000? (Convert at $1.50 per pound)

How many pounds does the investor will have at the end of the year? (Add 3% interest to the answer for question 1.)

If the exchange rate does not change over the year how many dollars will the investor have at the end of the year?

What is the repayment at the end of the year on the dollar denominated loan from question 1?

what is the profit earned by the investor?

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