Question
The following exchange rates and interest rates are available: Spot rate: $1.5000 / British Pound Six month Forward: $1.5625 / British Pound Six month U.S.
The following exchange rates and interest rates are available: Spot rate: $1.5000 / British Pound
Six month Forward: $1.5625 / British Pound Six month U.S. interest rate: 6.000%
Six month U.K. interest rate: 5.000%
You have $30,000 available. Can you make money by covered interest rate arbitrage transaction, and if so, how much?
Yes _____No _____Amount:$ ___________
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Financial Markets and Institutions
Authors: Jeff Madura
11th Edition
1133947875, 9781305143005, 1305143000, 978-1133947875
