A U.S. investor is attracted by the high yield on British bonds but is worried about a British pound depreciation. The currency market data are as follows:

A bond dealer has repeatedly suggested that the investor purchase hedged foreign bonds. This strategy can be described as the purchase of foreign currency bonds (here, British pound bonds) with simultaneous hedging in the short-term forward or futures currency market. The currency hedge is rolled over when the forward or futures contract expires.
a. What is the current three-month forward exchange rate (£:$)?
b. Assuming a £1 million investment in British bonds, how would you determine the exact hedge ratio necessary to minimize the currency influence?
c. When will this strategy be successful (compared with a direct investment in U.S. bonds)?

United States United Kingdonm Bond yield (%) Three-month interest rate (%) Spot exchange rate, :$ 2 12