Question
A foreign exchange trader at EXIM Bank can invest $100000, or the foreign currency equivalent of the bank's short term funds, in a covered interest
A foreign exchange trader at EXIM Bank can invest $100000, or the foreign currency equivalent of the bank's short term funds, in a covered interest arbitrage with india. Using the following quotes, can the trader make covered interest arbitrage (CIA) profit?
Arrbitrage funds available $100,000
Spot exchange rate rs/$ is 73
3 month forward rate rs/$ is 75
US dollar 3-month interest rate 4%
Danish kroner 3 month interest rate 6%
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Public Finance
Authors: Harvey S Rosen
7th Edition
0072876484, 978-0072876482
