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What would be the one-year forward exchange rate

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Assume that the comparable interest rates in UK and US are 12% and 5% respectively. Given that the spot rate is $ 1.6 / £, (a) what would be the one-year forward exchange rate? (consider the US as a home currency). (b) Do you expect the funds to flow from US to UK due to the interest rate differentials? Why?

Reference no: EM132783407

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