Question
You decide to try the carry trade. The one-year interest rate in the UK is 9% and it is 5% in the euro zone. The
You decide to try the carry trade. The one-year interest rate in the UK is 9% and it is 5% in the euro zone. The spot rate is 1.45/ and the one-year forward rate is 1.40/. What are your profits if you borrow 5 million for one year and the spot rate in one year is 1.4207/?
Answer is 89,870
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Finance For Nonfinancial Managers
Authors: Gene Siciliano
2nd Edition
0071824367, 978-0071824361
