Question
You have the following financial market information. You also have 1.21 million Australian dollar (A$) or 3.85 million Thai baht (THB) to make a profit
You have the following financial market information. You also have 1.21 million Australian dollar (A$) or 3.85 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$0.0482 | A$0.0694 |
THB one-year forward rate | A$0.0461 | A$0.0679 |
A$ spot rate | THB22.7325 | THB24.9533 |
A$ one-year forward rate | THB27.8536 | THB29.9373 |
Deposit rate | Loan rate | |
Interest rate on A$ | 2.66% | 4.59% |
Interest rate on THB | 6.66% | 8.13% |
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