4: Covered Interest Arbitrags You are a foreign exchange trader facing the following Canadian Dollar...
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4: Covered Interest Arbitrags You are a foreign exchange trader facing the following Canadian Dollar US Dollar Quotes Spot rate Six-month forward rate Six-month Canadian dollar interest rate Six-month US dollar interest rate C51.2620/USS CSI320/USS 7.00% actual 6 months rate) 4.00% (actual 6 months rate) You are authorized to use CS60,000,000 or is US equivalents. benefit from it (where he should borrow and where he should invest), and his monetary gains in US Is there a covered interest arbitrage? If covered interest arbitrage exists, show how the arbitrager can Dollars or Canadian Dollars
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