A foreign exchange trader can invest US$3.2 million, or the foreign currency equivalent in a covered...
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A foreign exchange trader can invest US$3.2 million, or the foreign currency equivalent in a covered interest arbitrage. Using the following quotes, should the trader make a covered interest arbitrage and if so, how much profit would the trade generate? Round to the nearest dollar. Arbitrage Funds available Spot exchange rate (£/US$) 90-day forward rate (£/US$) 90-day US dollar interest rate 90-day British interest rate $3,200,000 1.2477 1.2450 2.5% 1.5% A foreign exchange trader can invest US$3.2 million, or the foreign currency equivalent in a covered interest arbitrage. Using the following quotes, should the trader make a covered interest arbitrage and if so, how much profit would the trade generate? Round to the nearest dollar. Arbitrage Funds available Spot exchange rate (£/US$) 90-day forward rate (£/US$) 90-day US dollar interest rate 90-day British interest rate $3,200,000 1.2477 1.2450 2.5% 1.5%
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Related Book For
Fundamentals of Multinational Finance
ISBN: 978-0205989751
5th edition
Authors: Michael H. Moffett, Arthur I. Stonehill, David K. Eiteman
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