Covered Interest Arbitrage Illustration 9
USD 1 = INR 42.4210 (Spot rate)
6 month forward rate 43.2300
Annualized interest rate on INRÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 12%
Annualized interest rate on USDÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 8%
Find if arbitrage gain is possible and calculate the gain for 1 million.              (Mar. 2011)
(Ans.: Borrow Foreign and Gain USD 163 on 1 million USD)
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