Chapter 7
You have $1,000,000 to invest:
If you use covered interest arbitrage for a 90-day investment, what will be the amount of U.S. dollars you will have after 90 days?
Given the information in this question, the return from covered interest arbitrage by U.S. investors with $500,000 to invest is ____ percent.
As locational arbitrage occurs:
From the perspective of U.S. investors with $1,000,000, covered interest arbitrage would yield a rate of return of ____ percent.
Based on the information given, as you and others perform triangular arbitrage, what should logically happen to the spot exchange rates?
U.S. investors have $1,000,000 to invest:
Given this information:
Given the information in this question, the return from covered interest arbitrage by U.S. investors with $500,000 to invest is ____percent.
Assume you have $10,000 to conduct triangular arbitrage. What is your profit from implementing this strategy?
You have $900,000 to invest:
If you conduct covered interest arbitrage, what is the dollar profit you will have realized after 180 days?
You have $300,000 to invest:
The spot bid quote for the euro (€) is $1.08
The spot ask quote for the euro is $1.10
The 180-day forward rate (bid) of the euro is $1.08
The 180-day forward rate (ask) of the euro is $1.10
The 180-day interest rate in the United States is 6%
The 180-day interest rate in Europe is 8%
What will be the yield for an investor who has $1,000,000 available to conduct triangular arbitrage?
Assume you have $100,000 to conduct triangular arbitrage. What will be your profit from implementing this strategy?
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