(Answered) Assume that the one-year interest rate in canada is 4

Management Studies

Assume that the one-year interest rate in Canada is 4 percent. The one-year U.S. interest rate is 8 percent. The spot rate of the Canadian dollar (C$) is $.94. The forward rate of the Canadian dollar is $.98.

Is covered interest arbitrage feasible for U.S. investors? Show the results if Alabama Corporation engages in covered interest arbitrage if they have $1,000,000 to invest.

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