Choice between a risk free one year american security

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An international investor has a choice between a risk free one year american security with an annual return of 6% and a comparable british security with an annual return of 8%. If the spot rate is $1.50/pound and the one year forward rate is $1.40/pound, and there are no transaction costs, then what should the investor do to generate a risk less arbitrage(if any) also calculate the profit?

Reference no: EM132396622

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