Currency exchange rates and Eurocurrency interest rates are as follows: In what direction will covered interest arbitrage
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Currency exchange rates and Eurocurrency interest rates are as follows:
In what direction will covered interest arbitrage force the quoted rates to change? Explain the steps and compute the profit based on a $1 million initial position.
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Current Singapore dollar (S$) spot rate 1-year Singapore dollar (S$) forward rate 1-year Singapore dollar (S$) interest rate 1-year U.S. interest rate $0.50/S$ $0.51/S$ 4.0% 6.0%
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