Question
You have the following financial market information. You also have 1.26 million Australian dollar (A$) or 3.04 million Thai baht (THB) to make a profit
You have the following financial market information. You also have 1.26 million Australian dollar (A$) or 3.04 million Thai baht (THB) to make a profit due to covered interest arbitrage (CIA). Calculate the profit in percentage if the CIA opportunity exists in the market. (enter the two decimal number without sign and symbol)
| Bid price | Ask price | |
| THB spot rate | A$0.0470 | A$0.0644 |
| THB one-year forward rate | A$0.0427 | A$0.0638 |
| A$ spot rate | THB22.7589 | THB24.1035 |
| A$ one-year forward rate | THB27.6603 | THB29.0705 |
| Deposit rate | Loan rate | |
| Interest rate on A$ | 2.10% | 4.31% |
| Interest rate on THB | 6.10% | 8.38% |
Answer:
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