The current rates are: (1) Spot exchange rate: $2.00/£; (2) 90-day USD denominated bonds: 2% (8% annual); (3) 90-day UK pound denominated bonds: 4% (16% annual); (4) Current 90 day forward exchange rate: $1.98/£ Is the Pound trading at a premium or discount?

Solution and Explanation:

Assume US Investor need 1000 Pound after 90 days:

Option 1: Forward Option:1000 pound = 1000 multiply with 1.98 = $1980

Option 2: Invest in UK:

Need 1000 pound after 90 days

so, Invest in UK pound today 1000 divide by 1.04= 961.5385

to get 961.5385 today he need to pay = 961.5385 multiply with  $2 ( Current Spot Rate)

= $1923.077

Option 3 : Invest in US:

Need 1000 Pound after 90 days

so forward Exchange rate 1.98 he need 1000 pound* 1.98 = 1980 $ after 90 days

so invest today 1980/1.02 = $1941.176

Advise: Option 2 is best , Invest in UK Bonds

it's actually a very difficult task, due to not many people can make 2 million dollars in 2 years. besides that, to the not-so-realistic ideas, you can create a business. it could be practically anything, but make it into a business that isn't that known yet, you get me? also, lets not forget about stock market. that's where all the good stuff happens. use investments at the beginning and begin to raise up your business or whatever you're going to do. as this is a very non-realistic idea, it's still worth the shot!

answer; sales of books;