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Give correct answer The one-year interest rates are 8.74% and 10.04% in Malaysia and the United States, respectively. Assume that the spot rate today is
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The one-year interest rates are 8.74% and 10.04% in Malaysia and the United States, respectively. Assume that the spot rate today is MYR 2.3445/USD and the one-year forward rate is MYR2.4043/USD. If a Malaysian investor expects that the spot rate in one year to be MYR2.4675 for a U.S. dollar and uses MYR419,000 to execute covered interest arbitrage, the strategy will be because it will yield a return of a. Feasible; 12.85% b. Not feasible; 12.85% C. Feasible; 15.81% d. Not feasible; 15.81%Step by Step Solution
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