Question
Copenhagen Covered (A). Heidi Hi Jensen, a foreign exchange trader at J.P. Morgan Chase, can invest $5.05 million, or the foreign currency equivalent of the
Copenhagen Covered (A). Heidi Hi Jensen, a foreign exchange trader at J.P. Morgan Chase, can invest $5.05 million, or the foreign currency equivalent of the bank's short term funds, in a covered interest arbitrage with Denmark.
Arbitrage funds available $ 5,050,000
Spot exchange rate (kr/$) 6.1725
3-month forward rate (kr/$) 6.1975
U.S. dollar annual interest rate 3.050 %
Danish krone annual interest rate 5.100 %
What is the CIA profit potential %?
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Introduction To Finance Markets Investments And Financial Management
Authors: Ronald W. Melicher, Edgar A. Norton
14th Edition
0470561076, 9780470561072
