What is percentage return from covered interest arbitrage

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Reference no: EM131868120

Assume the following information: Current spot rate of Australian dollar = $.90 Forecasted spot rate of Australian dollar 1 year from now = $.88 1-year forward rate of Australian dollar = $.91 Annual 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?

Reference no: EM131868120

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