Multiple Choice
Assume the following information:
Given the information in this question, the return from covered interest arbitrage by U.S. investors with $500,000 to invest is ____percent.
Current spot rate of Australian dollar=$.64
Forecasted spot rate of Australian dollar 1 year from now=$.59
1-year forward rate of Australian dollar=$.62
Annual interest rate for Australian dollar deposit=9%
Annual interest rate in the United States=6%
A) about 6.00
B) about 9.00
C) about 7.33
D) about 8.14
E) about 5.59
Correct Answer:
Verified
Correct Answer:
Verified
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