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q10 help please Copenhagen Covered (B). Heidi Hi Jensen, a foreign exchange trader at J.P. Morgan Chase, can invest $4.9 million, or the foreign currency
q10 help please
Copenhagen Covered (B). Heidi Hi Jensen, a foreign exchange trader at J.P. Morgan Chase, can invest $4.9 million, or the foreign currency equivalent of the bank's short term funds, in a covered interest arbitrage with Denmark. She is now evaluating the arbitrage profit potential in the same market after interest rates change: . (Note that anytime the difference in interest rates does not exactly equal the forward premium, it must be possible to make CIA profit one way or another.) The CIA profit potential is %, which tells Heidi that she should borrow and invest in the interest rate currency, , gaining on the re-exchange of dollars for krone at the end of the period. (Round to three decimal places and select from the drop-down menus.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.)Step by Step Solution
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