Interest arbitrage by u.s. investors feasible

Reference no: EM133377525

Question: Assume the following information:

Spot rate of £ = 1.60
180-day forward rate of £ = 1.56
180-day British interest rate = 4%
180-day U.S. interest rate = 4%

Based on this information, is covered interest arbitrage by U.S. investors feasible? Explain all intermediate transactions involved.

Reference no: EM133377525

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