Multiple choice options below

A) us/ British

B) 1.33/1.0%

C) -2.97/2.97/-4.97,4.9%

D) options given

E) -1.1,-.09,1.1,0.9%

8. Covered versus uncovered Interest arbltrage Aa Aa On May 17, Chartes, a U.s. Investor, dealded to buy three-month Treasury bills. He found that the per-annum interest rate on three-month Treasury b.s is 8.00% in New York and 12.00% In London. Based on this information and assuming that tax costs and other transaction costs are negiligble in the two countries, it is in Interest to purchase Charles's best three-month Treasury bills, because it allows him to earn more for the three months. On May 17, the spot rate for the pound was $1.510, and the selling price of the three-month forward pound was $1.508. At that time, Charles chose to ignore thls difference in exchange rates. In three months, however, the s rate for the pound tell to $1.450 per pound. Thus, when Charies converted the ment proceeds back into U.S. dollars, his actual return on investment was As a result of this transaction, Charles realizes that there is great uncertainty about how many when the Treasury bills mature. So, he deaides to adjust his Investment strategy should Charles's strategy be the next time he considers investing in Treasury bills dollars he to eliminate this uncertainty. What t to match the anticipated proceeds from the investment. Sell enough foreign currency on the forward marke Exchange half of the anticipated proceeds of the investment for domestic currency. O O Exchange large amounts of foreign currency for domestic currency arbitrage on May 17, his net return on investment (relative to purchasing the U.S. Treasury bills) in British three-month Treasury bills would be Side B oft 40 2016