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 4.798% 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/$) | 1.2814 | ||
| 3-month forward rate (SFr/$) | 1.2739 | ||
| Expected spot rate in 90 days (SFr/$) | 1.2697 | ||
| U.S. Dollar annual interest rate | 4.798 | % | |
| Swiss franc annualinterest rate | 3.199 | % |
The uncovered interest arbitrage (UIA) profit amount is $________
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Investing In Bitcoin The Clear Explanation Of What Bitcoin Is
Authors: Russell Strassell
1st Edition
979-8353910404
