Answered step by step
Verified Expert Solution
Question
1 Approved Answer
You have the following financial market information. You also have 1.57 million Australian dollar (A$) or 3.51 million That baht (THB) to make a profit
You have the following financial market information. You also have 1.57 million Australian dollar (A$) or 3.51 million That baht (THB) to make a profit due to covered interest arbitrage. Calculate the profit in A$ or THB if the CIA opportunity exists in the market.
Bid priceAsk priceTHB spot rateA$0.0431A$0.0607THB one-year forward rateA$0.0421A$0.0647AUD spot rate22.4115 THB24.922 THBAUD one-year forward rate27.1789 THB29.6532 THB Deposit rateLoan rateInterest rate on A$2.43%4.19%Interest rate on THB6.36%8.53%What is the calculation to get 187,641?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started