Suppose interest rates are 2 and 4 in us and germany, Ask an Expert

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Suppose interest rates are 2% and 4% in US and Germany respectively. The spot rate is $1.3/Euro and the forward rate is $1.2/Euro

a) What is the yield to the US investor carrying covered interest arbitrage in Germany?

b) Calculate the arbitrage profit/loss to the US investor who borrows $1,000 for this strategy?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92367266

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