Question
You have the following financial market information. You also have 1.88 million Australian dollar (A$) or 3.14 million Thai baht (THB) to make a profit
You have the following financial market information. You also have 1.88 million Australian dollar (A$) or 3.14 million Thai baht (THB) to make a profit due to covered interest arbitrage (CIA). Calculate the profit in A$ or THB if the CIA opportunity exists in the market. (enter the whole number without sign and symbol)
Bid price | Ask price | |
THB spot rate | A$0.0464 | A$0.0682 |
THB one-year forward rate | A$0.0425 | A$0.0634 |
A$ spot rate | THB22.4037 | THB24.2606 |
A$ one-year forward rate | THB27.6528 | THB29.6897 |
Deposit rate | Loan rate | |
Interest rate on A$ | 2.70% | 4.58% |
Interest rate on THB | 6.98% | 8.23% |
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