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 4.801% return available in U.S. dollars by not covering his forward dollar receiptslong dashan uncovered interest arbitrage (UIA) transaction. Assess this decision. Arbitrage funds available $ 950,000 Spot exchange rate (SFr/$) 1.2805 3-month forward rate (SFr/$) 1.2745 Expected spot rate in 90 days (SFr/$) 1.2696 U.S. Dollar annual interest rate 4.801 % Swiss franc annualinterest rate 3.195 % The uncovered interest arbitrage (UIA) profit amount is $ nothing. (Round to the nearest cent.)
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