If you use covered interest arbitrage for a 90-day, Financial Management

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If you use covered interest arbitrage for a 90-day

Assume the following information. You have $1,000,000 to invest.

Current sport rate of pound = $1.60

90-day forward rate of pound = $1.57

3-month deposit rate in U.S. = 3%

3-month deposit rate in U.K. = 4%

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?

a. $1,020,500. b. $1,045,600 c. $1,073,330 d. $1,094,230 e. $1,116,250

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Financial Management: If you use covered interest arbitrage for a 90-day

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Financial Management: If you use covered interest arbitrage for a 90-day

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