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QUESTION
Assume the following information: Current spot rate of Australian dollar = $.90 Forecasted spot rate of Australian dollar 1 year from now = $.88...
Assume the following information: Current spot rate of Australian dollar=$.90Forecasted spot rate of Australian dollar 1 year from now=$.881-year forward rate of Australian dollar=$.91Annual interest rate for Australian dollar deposit=3%Annual interest rate in the U.S.=2%What is your percentage return from covered interest arbitrage with $500,000?
