Assume the following information: Spot rate of = $1.60 180-day forward rate of = $1.56 180-day British

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Assume the following information:

Spot rate of = $1.60

180-day forward rate of = $1.56

180-day British interest rate = 4%

180-day U.S. interest rate= 3%

(a)Based on this information, is covered interest arbitrage by U.S. investors feasible (assuming that U.S. investors use their own funds)? Explain.

(b)Does interest rate parity exist? Explain.

(Please provide detailed answers)

Posted Date: May 19, 2024 03:12 AM

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Assume the following information: Spot rate of = $1.60 180-day forward rate of = $1.56 180-day British

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