You have $825,000 to invest, and have access to the following information: Current spot rate of...
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You have $825,000 to invest, and have access to the following information: Current spot rate of Swiss Franc $.9257 90-day forward rate of the Swiss Franc %3D $.9197 Annual interest rate in the United States = 4.0% Annual interest rate in Switzerland 4.2% Considering what has been discussed in class, and using the most precise version of IRP, demonstrate whether covered interest arbitrage is possible for a 90-day investment. If so, what will be the amount of U.S. dollars you will have after 90 days? Explain all steps in detail while showing computations. You have $825,000 to invest, and have access to the following information: Current spot rate of Swiss Franc $.9257 90-day forward rate of the Swiss Franc %3D $.9197 Annual interest rate in the United States = 4.0% Annual interest rate in Switzerland 4.2% Considering what has been discussed in class, and using the most precise version of IRP, demonstrate whether covered interest arbitrage is possible for a 90-day investment. If so, what will be the amount of U.S. dollars you will have after 90 days? Explain all steps in detail while showing computations.
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yes covered interest arbitrage is possible in 90days Amount of US dollar in 90 days 499095 Here give... View the full answer
Related Book For
Exchange Rates and International Finance
ISBN: 978-0273786047
6th edition
Authors: Laurence Copeland
Posted Date:
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