3. The bank loan interest rate in London is 10%, the bank deposit interest rate in new york is 6%, and the exchange rate of the pound against the US dollar is 1: 1.8. If it's a six-month futures,
1. Suppose you have 100 and deposit it for 6 months.
100* 10%/2=5 interest.
100 *1.8 * 6%/2 = USD 5.4 interest.
5* 1.8=9 USD > $5.4, so there is the possibility of arbitrage.
2、
5.4/5= 1.08
So the exchange rate is 1: 1.08.