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Assume the following information (rates are actual 90-day interest rates, not annualized): Spot rate of Canadian dollar 90-day forward rate of Canadian dollar 90-day Canadian interest rate 90-day U.S. interest rate O 0.15; -0.05 O 0.15;0.05 $0.900 O-0.05; -0.05 O 0.15; 0.15 $0.890 3.50% Given this information, the yield (percentage return) to a U.S. investor who used covered interest arbitrage would be% (assume the investor invests $1 million). The yield (percentage return) to a Canadian investor who used covered interest arbitrage would be. 2.20%

Assume the following information (rates are actual 90-day interest rates, not annualized): Spot rate of Canadian dollar 90-day forward rate of Canadian dollar 90-day Canadian interest rate 90-day U.S. interest rate O 0.15; -0.05 O 0.15;0.05 $0.900 O-0.05; -0.05 O 0.15; 0.15 $0.890 3.50% Given this information, the yield (percentage return) to a U.S. investor who used covered interest arbitrage would be% (assume the investor invests $1 million). The yield (percentage return) to a Canadian investor who used covered interest arbitrage would be. 2.20%

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Assume the following information (rates are actual 90-day interest rates, not annualized): Spot rate of Canadian dollar 90-day forward rate of Canadian dollar 90-day Canadian interest rate 90-day U.S. interest rate O 0.15; -0.05 O 0.15;0.05 -0.05; -0.05 $0.900 O 0.15; 0.15 $0.890 Given this information, the yield (percentage return) to a U.S. investor who used covered interest arbitrage would be % (assume the investor invests $1 million). The yield (percentage return) to a Canadian investor who used covered interest arbitrage would be 3.50% 2.20%
Transcribed Image Text:Assume the following information (rates are actual 90-day interest rates, not annualized): Spot rate of Canadian dollar 90-day forward rate of Canadian dollar 90-day Canadian interest rate 90-day U.S. interest rate O 0.15; -0.05 O 0.15;0.05 -0.05; -0.05 $0.900 O 0.15; 0.15 $0.890 Given this information, the yield (percentage return) to a U.S. investor who used covered interest arbitrage would be % (assume the investor invests $1 million). The yield (percentage return) to a Canadian investor who used covered interest arbitrage would be 3.50% 2.20%
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