An investor seeking covered interest arbitrage will accomplish it with short-term borrowing and lending in the:

Question

Quizplus · Accepted Answer

Covered interest arbitrage involves taking advantage of the interest rate differential between two countries while covering exchange rate risk with a forward contract. This is typically accomplished in the Eurocurrency market, where currencies are deposited outside their home country, allowing investors to exploit differences in interest rates across countries without exposure to currency risk.

An Investor Seeking Covered Interest Arbitrage Will Accomplish It with Short-Term