Question: 4) Calculate the % return from covered interest arbitrage by US investors with US$1,000,000 to invest based on following assumptions: Spot rate of = $1.11

4) Calculate the % return from covered interest arbitrage by US

4) Calculate the % return from covered interest arbitrage by US investors with US$1,000,000 to invest based on following assumptions: Spot rate of = $1.11 Future spot rate of E=$1.08 1-year forward rate of =$1.15 Annual interest rate in Europe=2% Annual interest rate in the US=0.5% (10 points)

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