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Assume the following information: Quoted Price Spot rate of Chinese yuan $ 0 . 1 9 8 1 9 0 day forward rate of Chinese
Assume the following information:
Quoted Price
Spot rate of Chinese yuan
$
day forward rate of Chinese yuan
$
Chinese yuan deposit rate
US dollar deposit rate
Given this information, what would be the profitloss to an investor in the US who used covered interest arbitrage? Assume the investor invests $ million.
b What market forces would occur to eliminate any further possibilities of covered interest arbitrage?
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