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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 4.803% return available in U.S. dollars by not covering his forward dollar receiptsan uncovered interest arbitrage (UIA) transaction. Assess this decision. $ 900,000 1.2811 Arbitrage funds available Spot exchange rate (SFr/$) 3-month forward rate (SFr/$) Expected spot rate in 90 days (SFr/$) U.S. Dollar annual interest rate 1.2737 1.2695 4.803 % 3.198 % Swiss franc annualinterest rate The uncovered interest arbitrage (UIA) profit amount is $ (Round to the nearest cent.)
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