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A foreign exchange trader can invest US$ 7 . 5 million, or the foreign currency equivalent in a covered interest arbitrage. Using the following quotes,
A foreign exchange trader can invest US$ million, or the foreign currency equivalent in a covered interest arbitrage. Using the following quotes, should the trader engage in a covered interest arbitrage and if so how much CIA profit would the trade generate? Round to the nearest dollar.
Arbitrage Funds available
$
Spot exchange rate NZ$US$
day forward rate NZ$US$
day US dollar interest rate
day New Zealand interest rate
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