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Assume that the one-year interest rate in New Zealand is 2 percent. The one-year interest rate in the US is 3 percent. The spot rate
Assume that the one-year interest rate in New Zealand is 2 percent. The one-year interest rate in the US is 3 percent. The spot rate of the New Zealand dollar is $0.50. The one-year forward rate is $0.52. Does interest rate parity exist? Is covered interest arbitrage feasible for US investors? For New Zealand investors?
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