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Category > Accounting Posted 14 Jun 2017 My Price 5.00

Covered Interest Arbitrage in Both Directions The following information is available:

Covered Interest Arbitrage in Both Directions The following information is available:

 ■ You have $500,000 to invest.

â–  The current spot rate of the Moroccan dirham is $.110.

â–  The 60-day forward rate of the Moroccan dirham is $.108.

â–  The 60-day interest rate in the United States is 1 percent.

â–  The 60-day interest rate in Morocco is 2 percent

a. What is the yield to a U.S. investor who conducts covered interest arbitrage? Did covered interest arbitrage work for the investor in this case?

b. Would covered interest arbitrage be possible for a Moroccan investor in this case?

Answers

Alpha Geek
(8)
Status NEW Posted 14 Jun 2017 10:06 AM My Price 5.00

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file 1497436630-Answer.docx preview (114 words )
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