Only typed answer and please don't use chatgpt Suppose the interest rate on 6-month treasury bills is 7 percent per year in the United Kingdom and 4 percent per year in the United States. Also, today’s spot exchange price of the pound is $2.00 while the 6month forward exchange price of the pound is $1.98. By investing in U.K. treasury bills rather than U.S. treasury bills, and covering exchange-rate risk, U.S. investors earn an approximate extra return for 6 months of: a. 0.5 percent. (this is the answer; please show how to solve) b. 1.5 percent. c. 3.0 percent. d. 4.0 percent.
Only typed answer and please don't use chatgpt Suppose the interest rate on 6-month treasury bills is 7 percent per year in the United Kingdom and 4 percent per year in the United States. Also, today’s spot exchange price of the pound is $2.00 while the 6month forward exchange price of the pound is $1.98. By investing in U.K. treasury bills rather than U.S. treasury bills, and covering exchange-rate risk, U.S. investors earn an approximate extra return for 6 months of: a. 0.5 percent. (this is the answer; please show how to solve) b. 1.5 percent. c. 3.0 percent. d. 4.0 percent.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Only typed answer and please don't use chatgpt
Suppose the interest rate on 6-month treasury bills is 7 percent per year in the United Kingdom and 4
percent per year in the United States. Also, today’s spot exchange price of the pound is $2.00 while the
6month forward exchange price of the pound is $1.98. By investing in U.K. treasury bills rather than U.S.
treasury bills, and covering exchange-rate risk, U.S. investors earn an approximate extra return for 6
months of:
a. 0.5 percent. (this is the answer; please show how to solve)
b. 1.5 percent.
c. 3.0 percent.
d. 4.0 percent.
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