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

question 47

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: i_US = 4% and i_UK = 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

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Definitions:

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The formal act by which a sovereign nation announces and initiates a state of war against another sovereign nation.

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The organization and institution that holds the authority to govern a nation or country, usually comprising an executive, legislative, and judiciary branch.

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