Assume the following information: You have $400,000 to invest:
Current spot rate of Sudanese dinar (SDD)
=
$)00570
90-day forward rate of the Sudanese dinar
=
$)00569
90-day interest rate in the United States
=
4)0%
90-day interest rate in Sudan
=
4)2%

If you conduct covered interest arbitrage, what amount will you have after 90 days?
A) $421,213
B) $419,887
C) $424,242
D) $416,068

Question

Assume the following information: You have $400,000 to invest:
Current spot rate of Sudanese dinar (SDD)
=
$)00570
90-day forward rate of the Sudanese dinar
=
$)00569
90-day interest rate in the United States
=
4)0%
90-day interest rate in Sudan
=
4)2%
​
If you conduct covered interest arbitrage, what amount will you have after 90 days?
A) $421,213
B) $419,887
C) $424,242
D) $416,068

Quizplus · Accepted Answer

The Answer of Assume the following information: You have $400,000 to invest:
Current spot rate of Sudanese dinar (SDD)
=
$)00570
90-day forward rate of the Sudanese dinar
=
$)00569
90-day interest rate in the United States
=
4)0%
90-day interest rate in Sudan
=
4)2%
​
If you conduct covered interest arbitrage, what amount will you have after 90 days?
A) $421,213
B) $419,887
C) $424,242
D) $416,068

Assume the Following Information: You Have $400,000 to Invest