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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 4.805% return available in U.S. dollars by not covering his forward dollar receiptsan uncovered interest arbitrage (UIA) transaction. Assess this decision $ Arbitrage funds available Spot exchange rate (SFr/5) 3-month forward rate (SFr/5) Expected spot rate in 90 days (SFr/$) U.S. Dollar annual interest rate Swiss franc annualinterest rate 900,000 1.2806 1.2742 1.2697 4.805 % 3.197 % The uncovered interest arbitrage (UIA) profit amount is $ (Round to the nearest cent.)
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