Bid price =13.1160-0.0126 =13.1034.

Asking price =13.1360-0.0120 =13.1240.

According to the interest rate parity and spot purchase price, the theoretical forward exchange rate for three months is:

Principal and interest of 1 after 3 months deposit =1* (1+10%/4) =1.025.

13.1160hkd =13.1160 * (1+6%/4) =/kloc-.

3-month GBP /HKD forward exchange rate =13.31274/1.025 =12.9880, which is lower than the market exchange rate.

Therefore, the three-month forward pound in the market may be overvalued, because the Hong Kong dollar is converted into pounds at the spot and deposited in pounds, and at the same time, the forward sale of pounds is carried out.

100000 Hong Kong dollars, converted into1000/13.1360 = 761266.75 million pounds.

If you deposit it in sterling for three months, you can get the principal and interest = 76.126675 * (1+10%/4) = 78.029842.

At the same time, make a forward transaction of selling pounds for three months, and the delivery can be HK$ = 78.029842 *13.1034 =1022456227 million.

If the customer directly deposits Hong Kong dollars, after 3 months, the principal and interest will be =1000 * (1+6%/4) =1kloc-0/50,000 Hong Kong dollars.

Arbitrage profit =1022.456227-1kloc-0/5 = 74562.27 Hong Kong dollars.