Question
Assume the following current information: (i)The deposit rate on Euro-Yen 6-month deposits = 3% per annum (ii)The deposit rate on Euro-CAD 6-month deposits = 4%
Assume the following current information:
(i)The deposit rate on Euro-Yen 6-month deposits = 3% per annum
(ii)The deposit rate on Euro-CAD 6-month deposits = 4% per annum
(iii)The 6-month forward exchange rate: Yen 1.0 = CAD 0.0120
(iv)The current spot exchange rate: Yen 1.0 = CAD 0.0120
Does the given data satisfy the interest rate parity? If there is a covered interest arbitrage opportunity, find the arbitrage profit for the transaction size of CAD 1.0 million or Yen 83.33333 million
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Managerial Accounting
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
12th Edition
978-0073526706, 9780073526706
