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You work on the foreign exchange desk of Credit Capital, and you observe the following information: Spot rate of Canadian dollar = $0.70% 90-day Forward
You work on the foreign exchange desk of Credit Capital, and you observe the following information:
Spot rate of Canadian dollar = $0.70%
90-day Forward rate of Canadian dollar = $0.69%
90-day Canadian interest rate = 5%
90-day U.S. interest rate = 3.5%
Based on the above information, what would be the yield to a U.S. investor who used covered interest arbitrage (Assume the investor invests $2,000,000)
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