How much profit can be made with covered interest arbitrage


Assume the following information: 1-year interest rate on U.S. dollars = 11.7% 1-year interest rate on Singapore dollars = 9.4% Spot rate of Singapore dollar = 0.41 USD/SGD 1-year forward premium on Singapore dollars = 3.95% Given this information, how much profit can be made with covered interest arbitrage, by borrowing 1 million USD?

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Financial Management: How much profit can be made with covered interest arbitrage
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