Suppose that you are a trader in the United States (US) and you see the following quotes:
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Question:
Suppose that you are a trader in the United States (US) and you see the following quotes:
Spot exchange rate : 0.6815 US dollar (USD) per Australian dollar (AUD)
180 day forward rate : 0.6805 USD per AUD (USD/AUD)
180 day AUD interest rate: 2% per annum
180-day USD interest rate : 1% pa
Suppose that you have USD 800,000. Can you make a profit (in USD) with these quotes? Show your working clearly and completely.
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0078034640
7th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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