Question
The interest rate (on annual basis) on six-month Treasury Bills is 4% in London and 2% in New York. The spot rate is $1.50/ and
The interest rate (on annual basis) on six-month Treasury Bills is 4% in London and 2% in New York. The spot rate is $1.50/ and the six-month forward rate is $1.49/. Can a US investor, with $1,500,000 to invest, benefit from a covered interest arbitrage? By how much?
| Yes, by $4,800 | ||
| Yes, by $2,400 | ||
| Yes, by $12,250 | ||
| No, covered interest arbitrage is not possible | ||
| Yes, by $9,600 |
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Contemporary Issues In Behavioral Finance
Authors: Simon Grima
1st Edition
1787698823, 978-1787698826
