Question: U.S. borrowing rate for 1 year = 5% U.S. deposit rate for 1 year = 2% Lebanese Pound borrowing rate for 1 year = 9%

U.S. borrowing rate for 1 year = 5%

U.S. deposit rate for 1 year = 2%

Lebanese Pound borrowing rate for 1 year = 9%

Lebanese Pound deposit rate for 1 year = 6%

Spot quote = 1509 10 USDLBP

Lebanese Pound 1year forward quote = 1567 - 68 USDLBP

2. Use the information to determine if covered interest arbitrage is possible. Please mark the 4 resulting calculations and answers and whether its possible.(10)

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