International Economics 13th Edition by Robert Carbaugh

تمرين 11

Suppose the interest rate (on an annual basis) on three-month Treasury bills is 10 percent in London and 6 percent in New York, and the spot rate of the pound is $2.
a. How can a U.S. investor profit from uncovered interest arbitrage?
b. If the price of the three-month forward pound is $1.99, will a U.S. investor benefit from covered interest arbitrage? If so, by how much?