Use the following information for next 5 questions.

Assume the following information:

1-year deposit rate offered on U.S. dollars = 8%

1-year deposit rate offered on Singapore dollars = 12%

1-year forward rate of Singapore dollars (S$) = $0.702

Spot rate of Singapore dollar = $0.722

Question 8 (3.03 points)

U.S. investors have $1,000,000 to invest. If U.S. investors use covered interest arbitrage for a 1-year investment, what will be the amount of U.S. dollars U.S. investors will have after one year?

Question 8 options:

	$1,153,601.28.
	$1,151,908.83.
	$1,088,975.07.
	$1,125,417.29.

Question 9 (3.03 points)

Singapore investors have S$1,000,000 to invest. If Singapore investors use covered interest arbitrage for a 1-year investment, what will be the amount of Singapore dollars Singapore investors will have after one year?

Question 9 options:

	S$1,187,378.64.
	S$1,093,708.21.
	S$1,110,769.23.
	S$1,050,083.10.

Question 10 (3.03 points)

Using U.S. investors' investment results calculated above, does the covered interest arbitrage work for U.S. investors?

Question 10 options:

	No, the covered interest arbitrage does not work for U.S. investors because the yield is lower than 8%.
	Yes, the covered interest arbitrage works for U.S. investors because the yield is higher than 8%.
	Yes, the covered interest arbitrage works for U.S. investors because the yield is higher than 12%.
	No, the covered interest arbitrage does not work for U.S. investors because the yield is lower than 12%.

Question 11 (3.03 points)

Using Singapore investors' investment results calculated above, does the covered interest arbitrage work for Singapore investors?

Question 11 options:

	Yes, the covered interest arbitrage works for Singapore investors because the yield is higher than 8%.
	No, the covered interest arbitrage does not work for Singapore investors because the yield is lower than 12%.
	No, the covered interest arbitrage does not work for Singapore investors because the yield is lower than 8%.
	Yes, the covered interest arbitrage works for Singapore investors because the yield is higher than 12%.

Question 12 (3.03 points)

Based on the calculation and the conclusion you obtained for the previous 4 questions, does Interest Rate Parity hold under the current market condition? What is the 1-year forward rate of Singapore dollars that makes covered interest arbitrage infeasible? (Rounded the answer to 3 decimal points)

Question 12 options:

	It cannot be determined.
	No. $0.703
	No. $0.696
	No. $0.749