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USD/AUD Spot Rate 0.95 USD/AUD 6 Month Forward Rate 0.98 USD Interest Rate 7% per annum AUD Interest Rate 3% per annum You currently have
USD/AUD Spot Rate | 0.95 |
USD/AUD 6 Month Forward Rate | 0.98 |
USD Interest Rate | 7% per annum |
AUD Interest Rate | 3% per annum |
You currently have $1,000,000 AUD (or the USD equivalent) and are looking to undertake a covered interest arbitrage. Detail the required steps (including numbers/amounts), as well as the profit generated from undertaking such an arbitrage.
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