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The following information relates to a UK investor: He/she had 600,000 to invest. ...

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Accounting

The following information relates to a UK investor: He/she had 600,000 to invest. The current spot rate of the dollar is 0.6. The 90-day forward rate of the pound is 0.6. The 90-day interest rate in the United Kingdom is 3%. The 90-day interest rate in the United States is 4%. Given the above information, is covered interest arbitrage profitable for the UK investor? Explain your answer with necessary supporting calculations. [15 Marks]

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