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zmey [24]
2 years ago
9

The following is market information: Current spot rate of pound = $1.23 90-day forward rate of pound = $1.24 3-month deposit rat

e in U.S. = 1.1% 3-month deposit rate in Great Britain = 1.3% If you have $250,000 and use covered interest arbitrage for a 90-day investment, what will be the amount of U.S. dollars you will have after 90 days?
Business
1 answer:
creativ13 [48]2 years ago
3 0

Answer:

$255308.94 is the amount generated after 90 days

Explanation:

Coveered interest arbitrage

Convert dollars to pounds at spot rate

250000/1.23 =£203252.0325

Invest this amount at 1.3% (Britain rate) for 90 days

203252.0325 × 1.013 = £205894.3089

Then convert back to dollars at 90 day forward rate

205894.3089 × 1.24 = $255308.94

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What's your question I don't understand
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you have $6000 to invest in two stock funds. The first fund pays 5% annual interest and the second account pays 9% annual intere
stira [4]

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Amount of money invested is $2,000 and $4,000

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In this question, we are asked to calculate how much was invested in two different accounts given the amount of money invested in both accounts.

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