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Assume the following information: U.S. investors have $1,275,000 to invest 1-year deposit rate offered on U.S. dollars = .12 1-year deposit rate offered on Singapore
Assume the following information:
U.S. investors have $1,275,000 to invest 1-year deposit rate offered on U.S. dollars = .12 1-year deposit rate offered on Singapore dollars = 0.100 1-year forward rate of Singapore dollars = $0.412 Spot rate of Singapore dollar = $0.40
interest rate parity doesn't exist and covered interest arbitrage by U.S. investors results in a yield of _______ which is above what is possible domestically
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