The current rates are: (1) Spot exchange rate: $2.00/£; (2) 90-day USD denominated bonds: 2% (8% annual); (3) 90-day UK pound denominated bonds: 4% (16% annual); (4) Current 90 day forward exchange rate: $1.98/£ Is the Pound trading at a premium or discount?

Solution and Explanation:

Assume US Investor need 1000 Pound after 90 days:

Option 1: Forward Option:1000 pound = 1000 multiply with 1.98 = $1980

Option 2: Invest in UK:

Need 1000 pound after 90 days

so, Invest in UK pound today 1000 divide by 1.04= 961.5385

to get 961.5385 today he need to pay = 961.5385 multiply with  $2 ( Current Spot Rate)

= $1923.077

Option 3 : Invest in US:

Need 1000 Pound after 90 days

so forward Exchange rate 1.98 he need 1000 pound* 1.98 = 1980 $ after 90 days

so invest today 1980/1.02 = $1941.176

Advise: Option 2 is best , Invest in UK Bonds

answer; i believe that the correct answer is (supply chain);

1) the stages a new product goes through from beginning to end, i.e., the stages that a product passes through from introduction through growth, maturity, and decline. 2) the time from initial research and development to the time at which sales and support of the product to customers are withdrawn. 3) the period of time during which a product can be produced and marketed profitably.

                                          hope it