1. Question 1 3 point SA Ben Holt has obtained several forward contract quotations for the Thai baht to determine whether covered interest arbitrage may be possible. He was quoted a forward rate of 0.0155 per Thai baht for a 90-day forward contract. The current spot rate is 0.0157. Ninety-day Interest rates available to Blades in the United Kingdom are 18 %, while 90 day interest rates in Thalind are 8.75 (these rates are not annualized Holt is aware that covered interest arbitrage, unlike locational and triangular arbitrage, requires an investment of funds. Thus, he would like to be able to estimate the pound profit resulting from arbitrage over and above the pound amount available on a 90-day UK deposit Determine whether the forward rate is priced appropriately. It is not priced appropriately determine the profit you could generate for Blades by withdrawing 2100,000 from Blades Current account and engaging in covered interest arbitrage Measure the profit as the excess amount above what you could generate by investing in the UK money market Covered Interest Arbitrage On Day 1, convert pounds to Thai baht and set up a so-day deposit account at a The bank 2. In 90 day, the Thai deposit will mature and moreet wit be received 2. In 90 days, convert the Thai baht into pounds at the agreed-upon rate 4 Pound amount available on a 90-day UK deposit 5. Pound profit over and above the pound amount available on a 90-day U.S. deposit Moving to the nation went changes to the Oon 1 of 10 Close Window