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Assume the Following: You Have $10,000 to Invest

Question 19

Multiple Choice

Assume the following:
You have $10,000 to invest.
The current spot rate: S$/£ = 2.00,the 90-day forward: F90$/£ = 1.80,annual interest rates: iUS = 4% and iUK = 8%.
If you invest $10,000 in the U.S.for 90 days,you will get $____________.If you invest in the U.K.and cover in the forward market for 90 days,you will get $__________.


A) $10,100: $10,098
B) $10,400: $9,720
C) $10,100: $10,133
D) $10,400: $10,692

Correct Answer:

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