Solved: Is covered interest arbitrage feasible for us investors, Finance Basics

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Is covered interest arbitrage feasible for us investors

Problem:

Covered Interest Arbitage in Both Directions

The one-year interest rate in New Zealand is 6%.
The one-year interest rate in US is 10%
The soot rate of the New Zealand dollar (NZs) is $.50
The forward rate of the New Zealand dollar is $.54

Is covered interest arbitrage feasible for US investors?

Is it feasible for NZ investors?

In each case, please explain why covered intrest arbitrage is or is not feasible?

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Finance Basics: Is covered interest arbitrage feasible for us investors

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Finance Basics: Is covered interest arbitrage feasible for us investors

Reference No:- TGS02065739

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