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The Covered Interest Arbitrage potential is 0.2670.267%, which tells Heidi Hi Jensen that she should borrow U.S. dollars and invest in the higher yielding currency
The Covered Interest Arbitrage potential is 0.2670.267%, which tells Heidi Hi Jensen that she should borrow U.S. dollars and invest in the higher yielding currency the Danish krone , for CIA profit. (Round to three decimal places)
DATA
Arbitrage funds available ($) 4,900,000 Spot exchange rate (kr=$1.00) 6.1725 3-month forward rate (kr=$1.00) 6.1978 U.S. dollar 3-month interest rate (%) 3.100 Danish krone 3-month interest rate (%) 5.000
Part 2
Question: What is Heidi Hi Jensen generates a covered interest arbitrage (CIA) profit of $?
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