The U.S.interest rate is 2%.The U.K.interest rate is 2.25% The spot rate is 2.01 $/£,and the forward rate (for a 12 month contract)is 1.96 $/£ .
Does the covered interest arbitrage condition hold? If not,in which country would you be better off investing? Show how you know.

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The Answer of The U.S.interest rate is 2%.The U.K.interest rate is 2.25% The spot rate is 2.01 $/£,and the forward rate (for a 12 month contract)is 1.96 $/£ . Does the covered interest arbitrage condition hold? If not,in which country would you be better off investing? Show how you know.

The USInterest Rate Is 2