Wat is the yield of the potential arbitrage opportunity


Assume that annual interest rates are 2 percent in the United States and 7.7 percent in India. An investment bank can borrow (by issuing CDs) or lend (by purchasing CDs) at these rates in both countries. The spot exchange rate is USD/INR=67.60 and the one year forward rate is 69.6. What is the yield of the potential arbitrage opportunity (%) ?

Request for Solution File

Ask an Expert for Answer!!
Financial Management: Wat is the yield of the potential arbitrage opportunity
Reference No:- TGS02668639

Expected delivery within 24 Hours