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Calculate the % return from covered interest arbitrage by US investors with US$1,000,000 to invest...

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Finance

  1. Calculate the % return from covered interest arbitrage by US investors with US$1,000,000 to invest based on following assumptions:

Spot rate of = $1.14

Future spot rate of =$1.12

1-year forward rate of =$1.10

Annual interest rate in Europe= 2%

Annual interest rate in the US= 1%

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