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Assume you have the following information: Spot Rate: 5.11 CNY (Chinese Yuan) / 1 CAD (Canadian Dollar) Seven-month Forward Exchange Rate: 5.30 CNY/1 CAD One-Year

Assume you have the following information:

Spot Rate: 5.11 CNY (Chinese Yuan) / 1 CAD (Canadian Dollar)

Seven-month Forward Exchange Rate: 5.30 CNY/1 CAD

One-Year CAD Interest Rate: 0.70% annually

One-Year CNY Interest Rate: -0.25% annually

Is covered interest arbitrage worthwhile? If so, calculate the profits after seven months, assuming that you have 10,000 CAD. what else may you do to maximize profits if the covered interest arbitrage is worthwhile?

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Assume that you have the following information: Spot Rate: 5.11 CNY/1 CAD Seven-month Forward Exchange Rate: 5.30 CNY /1 CAD One-Year CAD Interest Rate: 0.70 % annually One-Year CNY Interest Rate: -0.25 % annually CAD: Canadian Dollar CNY: Chinese Yuan Is covered interest arbitrage worthwhile? If so, calculate the profits after seven months, assuming that you have 10,000 CAD now. What else might you do to maximize profits if the covered interest arbitrage is worthwhile (explain in words)

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