foreign exchange trader of a bank has an investment of $5 million or may make an investment in the foreign currency equivalent of the short-term funds of the bank in form a covered interest arbitrage. The 5,000,000. sing the below information, compute the covered Interest arbitrage profit made by the trader. -month interest rate of U.S. dollar is 3.0% month interest rate of Australian dollar is 5.0% Dot exchange rate is (AUD/S) 6.1720 month forward rate is (AUD/S) 6.1980 The covered Interest arbitrage profit is $2,634.89. The covered Interest arbitrage profit is $3,125.75.
foreign exchange trader of a bank has an investment of $5 million or may make an investment in the foreign currency equivalent of the short-term funds of the bank in form a covered interest arbitrage. The 5,000,000. sing the below information, compute the covered Interest arbitrage profit made by the trader. -month interest rate of U.S. dollar is 3.0% month interest rate of Australian dollar is 5.0% Dot exchange rate is (AUD/S) 6.1720 month forward rate is (AUD/S) 6.1980 The covered Interest arbitrage profit is $2,634.89. The covered Interest arbitrage profit is $3,125.75.
ChapterP2: Part 2: Exchange Rate Behavior
Section: Chapter Questions
Problem 1Q
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