Suppose that the U.S. dollar-pound sterling spot exchange rate equals e= $1.60/£, while the 360-day forward...

Suppose that the U.S. dollar-pound sterling spot exchange rate equals e= $1.60/£, while the 360-day forward rate is f 12 = $1.64/£. The yield on a one-year U.S. Treasury bill is i ($) = 9% and on a one-year U.K. Treasury bill the yield is i (£) = 8%. d. Is pound sterling selling at a forward premium or discount versus the U.S. dollar? Compute this value.

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jeff jeffy answered 1 year ago

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