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An investor has 5, 000,000 to invest, no borrowing is required. The current spot rate of the Algerian dinar is 0.08. The 90-day forward rate
An investor has 5, 000,000 to invest, no borrowing is required. The current spot rate of the Algerian dinar is 0.08. The 90-day forward rate of the Algerian dinar is 0.06. The 90-day interest rate in the United Kingdom is 1.5 per cent. The 90-day interest rate in Algeria is 3 per cent.
What is the total return in Algerian dinar after 90 days (including interest)?
What is the profit or loss in pounds?
What is the yield of this investment to a UK investor?
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