The current exchange rate between the United States and Britan is $2.0 per pound. The 6- month forward rate between the British pound and the U.S. dollar is $1.95 per pound. What is the interest rates in UK if US interest rate is 5%?

The current exchange rate between the United States and Britan is $2.0 per pound. The 6- month forward rate between the British pound and the U.S. dollar is $1.95 per pound. What is the interest rates in UK if US interest rate is 5%?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter22: International Financial Management

Section: Chapter Questions

Problem 1P

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Question

19. The current exchange rate between the United States and Britan is $2.0 per pound. The 6-
month forward rate between the British pound and the U.S. dollar is $1.95 per pound. What
is the interest rates in UK if US interest rate is 5%?

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