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?

Jose should tell George about the comparison sites the way it helps to compare the price of different products in different outlets s well cross different brands, however, the results are not always perfect and accurate.

Explanation

The Business Model of Price Comparison Sites is immensely useful and makes a clear cut comparison of different products concerning their brands and various market outlets. These comparison sites help create a better rapport with customers as also it helps create value for the products, however, at the same time Price Comparison sites are not considered to be the best and perfect way of determining prices.Price Comparison sites are laden with lots of imperfections that makes it a little inaccurate and undesirable. The first flow of Business model price comparison sites is that they don't consider the competitor's price which leads to overpricing of one's product. As a result of this overpricing, customer demand for such products goes down and eventually loss for the company. The other imperfection which is there in business model price comparison is that companies while pricing product takes into consideration several criteria and determinants which are not considered by business models. Therefore, this often leads to overpricing and under-pricing. Furthermore, differences in the price of the product on the website and the one determined by the price comparison model also points to imperfection.