You can trade at the following prices: Is covered interest arbitrage worthwhile? If so, explain the steps
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You can trade at the following prices:
Is covered interest arbitrage worthwhile? If so, explain the steps and compute the profit based on an initial (time t = 0) transaction of $1 million. Calculate your profit in dollars in one period.
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Spot rate, Mexican pesos per dollar 6-month forward rate for Mexican pesos 6-month Mexican interest rate 6-month U.S. interest rate MXN10/$ MXN11/$ 18% 6%
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