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Assume the following information: Spot rate of New Zealand dollar (NZ$) 1NZ$ = 0.500 USD One year forward rate of New Zealand dollar (NZ$) 1NZ$
Assume the following information: Spot rate of New Zealand dollar (NZ$) 1NZ$ = 0.500 USD One year forward rate of New Zealand dollar (NZ$) 1NZ$ = 0.600 USD One year New Zealand interest rate = 15% One year U.S. interest rate = 5% Given this information, is it worthwhile for a New Zealand investors (who currently has New Zealand Dollars) to invest in the U.S.? Carefully explain and illustrate (using a flow chart) your answer.
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