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Given CHF 3,500,000 as your capital, calculate the possible profit from covered interest arbitrage. Explain specific steps that you must take to make a covered interest arbitrage. CHF Fr = SwissFranc BND = Brunei Darul Salam Spot rate CHF0.7359/BND 270-day forward rate CHF 0.7359/BND 9-month Brunei interest rate 5% 9-month swiss interest rate 4% Step 1

Given CHF 3,500,000 as your capital, calculate the possible profit from covered interest arbitrage. Explain specific steps that you must take to make a covered interest arbitrage. CHF Fr = SwissFranc BND = Brunei Darul Salam Spot rate CHF0.7359/BND 270-day forward rate CHF 0.7359/BND 9-month Brunei interest rate 5% 9-month swiss interest rate 4% Step 1

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
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Given CHF 3,500,000 as your capital, calculate the possible profit from covered interest arbitrage. Explain specific steps that you must take to make a covered
interest arbitrage.

CHF Fr = SwissFranc BND = Brunei Darul Salam

Spot rate

CHF0.7359/BND

270-day forward rate

CHF 0.7359/BND

9-month Brunei interest rate

5%

9-month swiss interest rate

4%

Step 1

1) Different i for Base rate -Quote rate =

2) Different between Spot and Forward =

(1) + (2) =

invest in _ borrow in _

                                                          

Step 2 explain using table

2 Second step spot
Transcribed Image Text:2 Second step spot
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