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Determine the exchange rate risk

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You have access to $1,500,000 or £1,000,000. Assume the spot rate is $1.50/£. The annualized 4-month interest rate is 6.5% in US and 5.1% in the UK. 4-month forward rate is quoting 1.48 US dollar for each pound. How much money you can make considering above rates without having exchange rate risk?

Reference no: EM133205279

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