Covered Interest Arbitrage Illustration 8


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Covered Interest Arbitrage Illustration 8

Spot rate 1.8528 USD per Pound

6 months forward 1.8538 USD per Pound

Interest Rates: USA 4% p.a. Britain 3% p.a.

Workout arbitrage possibilities.                                                                         (April 2005)

(Ans.: Borrow Foreign (Pound £) and Invest Home (USD), Gain 4,449)


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