The one-year interest rate in Singapore is 11 percent. The one-year interest rate in the United States

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The one-year interest rate in Singapore is 11 percent. The one-year interest rate in the United States is 6 percent. The spot rate of the Singapore dollar (S$) is $.50 and the forward rate of the S$ is $.46. Assume zero transaction costs.

(i) Does interest rate parity exist?

(ii) Can a U.S. firm benefit from investing funds in Singapore using covered interest arbitrage?

(Please provide detailed answer)

Posted Date: May 18, 2024 10:08 PM

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The one-year interest rate in Singapore is 11 percent. The one-year interest rate in the United States

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