Question 1 You are the sales manager for a United States company that exports mobile phones to the United Kingdom. You h

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Question 1 You are the sales manager for a United States company that exports mobile phones to the United Kingdom. You h

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Question 1
You are the sales manager for aUnited States company that exports mobile phones to the UnitedKingdom. You have just signed a deal to ship phones to a Britishdistributor. The deal is denominated in pounds, and you willreceive £700,000 when the phones arrive in London in 6 months.Assume that you can borrow and lend at 7% p.a. in U.S. dollars andat 10% p.a. in British pounds. Both interest rate quotes areannualized rates. The spot exchange rate is $1.4945/£, and the6-month forward exchange rate is $1.4802/£.
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