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eprinted from 3a (above) pot rate of British Pound = $1.57 80-Day forward rate of British Pound = $1.53 ritish interest rate (Annual) = 5.0%

eprinted from 3a (above) pot rate of British Pound = $1.57 80-Day forward rate of British Pound = $1.53 ritish interest rate (Annual) = 5.0%

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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Reprinted from 3a (above) Spot rate of British Pound = $1.57 180-Day forward rate of British Pound = $1.53 British interest rate (Annual) = = 5.0% U.S. Interest Rate (Annual) = 4.4% If 3a is true, calculate your PROFIT if you exercise covered interest arbitrage given you can borrow either $1 million (USD) or 1 million British pounds. 1,025,000 Pounds There was no CIA opportunity in Question 8a CIA in this problem produces a loss 1,048,718.95 Pounds 23,718.95 Pounds 23,718.95 USD
Transcribed Image Text:Reprinted from 3a (above) Spot rate of British Pound = $1.57 180-Day forward rate of British Pound = $1.53 British interest rate (Annual) = = 5.0% U.S. Interest Rate (Annual) = 4.4% If 3a is true, calculate your PROFIT if you exercise covered interest arbitrage given you can borrow either $1 million (USD) or 1 million British pounds. 1,025,000 Pounds There was no CIA opportunity in Question 8a CIA in this problem produces a loss 1,048,718.95 Pounds 23,718.95 Pounds 23,718.95 USD
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