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Currently, the spot exchange rate is $1.50/£ and the three-month forward exchange rate is $1.52/£. The three-month interest rate is 8.0% per annum in the U.S. and 5.8% per annum in the U.K. Assume that you can borrow as much as $1,500,000 or £1,000,000.

According to the IRP, what is the Expected 3-month USD/GBP forward rate?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92313509

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