Reprinted from 3a (above) Spot rate of British Pound = $1.57 180-Day forward rate of British...
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Reprinted from 3a (above) Spot rate of British Pound = $1.57 180-Day forward rate of British Pound = $1.53 British interest rate (Annual) = 5.0% U.S. Interest Rate (Annual) = 4.4% If 3a is true, calculate your PROFIT if you exercise covered interest arbitrage given you can borrow either $1 million (USD) or 1 million British pounds. (15 Points) 1,025,000 Pounds There was no CIA opportunity in Question 8a CIA in this problem produces a loss 1,048,718.95 Pounds 23,718.95 Pounds 23,718.95 USD Reprinted from 3a (above) Spot rate of British Pound = $1.57 180-Day forward rate of British Pound = $1.53 British interest rate (Annual) = 5.0% U.S. Interest Rate (Annual) = 4.4% If 3a is true, calculate your PROFIT if you exercise covered interest arbitrage given you can borrow either $1 million (USD) or 1 million British pounds. (15 Points) 1,025,000 Pounds There was no CIA opportunity in Question 8a CIA in this problem produces a loss 1,048,718.95 Pounds 23,718.95 Pounds 23,718.95 USD
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