Sheila Thompson, a foreign exchange trader at JP Morgan Chase, can invest $1M, or the foreign currency equivalent of the bank’s short-term funds, in an uncovered interest arbitrage with the United Kingdom. Arbitrage funds available to invest $1M (or the equivalent in pounds) Spot rate ($/£) 1.4788 90-day forward exchange rate ($/£) 1.5493 Expected 90-day spot exchange rate ($/£) 1.5898 Annualized U. K. pound 90-day interest rate 23% Short Answer Question (10 points) Suppose that the 90-day interest rate in the U. S. has changed to 4.75% and this investor intends to use $1M (or the equivalent in pounds) to invest, should this investor make an uncovered or covered interest rate investment? Show your calculation(s) for this question. Which country should he or she invest in?

Lavage rapide is a canadian company that owns and operates a large automatic car wash facility near montreal. the following table provides data concerning the company’s costs: fixed cost per month cost per car washed cleaning supplies $ 0.70 electricity $ 1,400 $ 0.07 maintenance $ 0.15 wages and salaries $ 4,900 $ 0.30 depreciation $ 8,300 rent $ 1,900 administrative expenses $ 1,400 $ 0.03 for example, electricity costs are $1,400 per month plus $0.07 per car washed. the company expects to wash 8,000 cars in august and to collect an average of $6.50 per car washed. the actual operating results for august appear below. lavage rapide income statement for the month ended august 31 actual cars washed 8,100 revenue $ 54,100 expenses: cleaning supplies 6,100 electricity 1,930 maintenance 1,440 wages and salaries 7,660 depreciation 8,300 rent 2,100 administrative expenses 1,540 total expense 29,070 net operating income $ 25,030 required: calculate the company's revenue and spending variances for august.