Question
You are given the following exchange rates and one year interest rates: Bid Ask Euro Spot 1.11 1.12 Euro Forward 1.11 1.12 Deposit rate Loan
- You are given the following exchange rates and one year interest rates:
| Bid | Ask | |
| Euro Spot | 1.11 | 1.12 |
| Euro Forward | 1.11 | 1.12 |
| Deposit rate | Loan rate | |
| Interest rate in US | 5.0 | 9.0 |
| Interest rate in EU | 6.0 | 9.5 |
|
|
You have $100,000 to invest for one year. Would you benefit from engaging in covered interest arbitrage? Show your work.
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Small Brewery Finance
Authors: Maria Pearman
1st Edition
1938469526, 978-1938469527
