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Rewrite the uncovered-interest-parity equation

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Suppose the spot exchange rate between the U.S. dollar and the British pound is 1.5492$/pound, the interest rate on a three month U.S. financial instrument 1.24 percent, and the interest rate on a similar U.K. financial instrument is 3.66 percent.

a) Rewrite the uncovered-interest-parity equation to show how it is a guide for the future spot rate.

b) Based on the given information, calculate the implied expectation of the spot rate between the U.S. dollar and the British pound

Reference no: EM13670485

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