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:

Basal Ganglia

A group of nuclei in the brain associated with a variety of functions including control of voluntary motor movements, procedural learning, and habits.

Frontal Lobe

The front part of the brain associated with reasoning, planning, parts of speech, movement, emotions, and problem-solving.

Cerebellum

A part of the brain located at the back of the skull, vital for coordinating movement and maintaining physical balance.

Working Memory

A cognitive system responsible for temporarily holding and manipulating information for tasks such as reasoning and understanding.