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Suppose it takes 1.3037 U.S. dollars today to purchase one British pound in the foreign exchange...

Suppose it takes 1.3037 U.S. dollars today to purchase one British pound in the foreign exchange market, and currency forecasters predict that the U.S. dollar will depreciate by 12% against the pound over the next 30 days. How many dollars will a pound buy in 30 days? Enter your answer rounded to four decimal places. For example, if your answer is 12.34567 then enter as 12.3457 in the answer box.

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Answer #1

1 Pound = 1.3037 $

Now Dollar is Depriciated which means pound is appreciated by 12%

So 30 days Forward Rate of $ will be

1 Pound = 1.3037 $ + 12%* 1.3037

= 1.460144 $

It will take 1.460144 $ to buy 1 pound after a month.

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