Question
6. Assume the following information: One-year interest rate in New Zealand 5 percent One-year interest rate in U.S 12 percent Spot rate NZ$ $0.60 Forward
6. Assume the following information: One-year interest rate in New Zealand 5 percent One-year interest rate in U.S 12 percent Spot rate NZ$ $0.60 Forward rate NZ$ $0.54 initial investment of $10,000,000 (US (NZ) dollars for US (NZ) investor Is covered interest rate possible for US investors? New Zealand investors? Explain why covered interest rate arbitrage is or is not feasible.
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Fundamentals Of Corporate Finance
Authors: Jonathan Berk, Peter DeMarzo, Jarrod Harford, David Stangeland, Andras Marosi
3rd Canadian Edition
0135418178, 978-0135418178
