Question
Assume the following information: Current spot rate of Australian dollar = $.86 Forecasted spot rate of Australian dollar 1 year from now = $.88 1-year
Assume the following information:
| Current spot rate of Australian dollar | = | $.86 |
| Forecasted spot rate of Australian dollar 1 year from now | = | $.88 |
| 1-year forward rate of Australian dollar | = | $.93 |
| Annual interest rate for Australian dollar deposit | = | 4% |
| Annual interest rate in the U.S. | = | 2% |
What is your percentage return from covered interest arbitrage with $550,000 for one year?
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Clever Girl Finance Learn How Investing Works Grow Your Money
Authors: Bola Sokunbi
1st Edition
1119696739, 978-1119696735
