Question
You have the following financial market information. You also have 1.08 million Australian dollar (A$) or 3.36 million Thai baht (THB) to make a profit
You have the following financial market information. You also have 1.08 million Australian dollar (A$) or 3.36 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$0.0486 | A$0.0604 |
| THB one-year forward rate | A$0.0448 | A$0.0614 |
| A$ spot rate | THB22.9386 | THB24.2396 |
| A$ one-year forward rate | THB27.9017 | THB29.4734 |
| Deposit rate | Loan rate | |
| Interest rate on A$ | 2.25% | 4.55% |
| Interest rate on THB | 6.47% | 8.58% |
Answer:
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Financial Management In The Sport Industry
Authors: Matthew T Brown, Daniel Rascher, Mark S Nagel, Chad Mcevoy
1st Edition
1934432040, 978-1934432044
