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Suppose the spot price of the British pound is currently $1.55. If the risk-free interest rate...

Suppose the spot price of the British pound is currently $1.55. If the risk-free interest rate on one-year government bonds is 5.70% in the United States and 5% in the United Kingdom, what must the forward price of the pound be for delivery one year from now? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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Answer #1

Forward price = $1.55 × (1.0570 / 1.05)

Forward price = $1.56

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