Question
Casper Landsten-UIA (B). Casper Landsten is a foreign exchange trader for a bank in New York. Using the values and assumptions below, he decides to
Casper Landsten-UIA (B). Casper Landsten is a foreign exchange trader for a bank in New York. Using the values and assumptions below, he decides to seek the full 4.796% return available in U.S. dollars by not covering his forward dollar
receiptsan uncovered interest arbitrage (UIA) transaction. Assess this decision.
|
Arbitrage funds available | $ | 1,050,000 | |
| Spot exchange rate (SFr/$) | 1.2811 | ||
| 3-month forward rate (SFr/$) | 1.2744 | ||
| Expected spot rate in 90 days (SFr/$) | 1.2705 | ||
| U.S. Dollar annual interest rate | 4.796 | % | |
| Swiss franc annualinterest rate | 3.203 | % |
The uncovered interest arbitrage (UIA) profit amount is $
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Banking On Freedom Black Women In U.S. Finance Before The New Deal
Authors: Shennette Garrett-Scott
1st Edition
0231183917, 978-0231183918
