Question
Covered Interest Arbitrage Assume the following information: Spot rate of British pound $1.25 90-day forward rate of British pound $1.22 90-day British interest rate 5.0%
- Covered Interest Arbitrage Assume the following information:
Spot rate of British pound $1.25
90-day forward rate of British pound $1.22
90-day British interest rate 5.0%
90-day U.S. interest rate 2.0%
Given this information, what would be the yield (percentage return) to a U.S. investor who used covered interest arbitrage? (Assume the investor invests $1 million.) What market forces would occur to eliminate any further possibilities of covered interest arbitrage?
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The Everything Guide To Fundraising From Grassroots Campaigns To Corporate Sponsorships All You Need To Support Your Cause
Authors: Adina Genn
1st Edition
1598698230,1605507636
