Question
Interest rate covered arbitrage One year interest rate for US $ = 1% One year interest rate for Mexican peso = 4.25% One year forward
Interest rate covered arbitrage
| One year interest rate for US $ | = | 1% |
| One year interest rate for Mexican peso | = | 4.25% |
| One year forward rate for Peso | = | $0.045 |
| Spot rate for Peso | = | $0.05 |
Is there an arbitrage opportunity? If there is, how much would you benefit from this opportunity with US$1million or Peso 1million?
| There is no arbitrage opportunity. | ||
| $79,722 | ||
| Peso 79,722 | ||
| None of above |
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Essentials Of Health Care Finance
Authors: William O. Cleverley, James O. Cleverley
8th Edition
1284094634, 978-1284094633
