How much would it cost you in usd

Reference no: EM132955769

Question: While you were visiting London, you purchased a Jaguar for £35,000, payable in three months. You have enough cash at your bank in New York City, which pays 0.22% interest per month, compounding monthly, to pay for the car. Currently, the GBP/USD is 1.4557 and the three-month forward is 1.4244. In London, the money market interest rate is 1.2% for a three-month investment. You are studying the following payment method: Buy a certain pound amount spot today and invest the amount in the U.K. for three months so that the maturity value becomes equal to £35,000. How much would it cost you in USD? (no cents)

Reference no: EM132955769

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