Question: QUESTION 1 Consider the following table, which reports the spot exchange rate between the dollar and the pound, as well as the interest rates in

QUESTION 1 Consider the following table, which reports the spot exchange rate between the dollar and the pound, as well as the interest rates in the UK and the U5 (standard notation applies]: $f exchange rate r\"\" {96] rm {9'5} -- mm -_ 1 year 4.8 5.1 {a} Showing all your calculations, evaluate the 1-month, 1-year, 3-month, and 6-month forward exchange rate between the pound and the dollar; [It] marks] [b] Consider the 1-year interest rates in the UK and in the USA and suppose you have Sl to invest in a carry trade strategy. Showing all your calculations, derive the corresponding losses! prots if the current spot exchange rate is $1.5?651'E1 and the spot exchange rate one year from now remains unchanged. [1i]| marks]

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