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 4.797% 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 $ 1,100,000
Spot exchange rate (SFr/$) 1.2809
3-month forward rate (SFr/$) 1.2742
Expected spot rate in 90 days (SFr/$) 1.2704
U.S. Dollar annual interest rate 4.797 %
Swiss franc annualinterest rate 3.204 %
The uncovered interest arbitrage (UIA) profit amount is $ . (Round to the nearest cent.)
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