Misty, an American is a currency dealer, based in New York, has $ 400,000 that he wishes to invest in Kenya. The investm
Posted: Fri Mar 04, 2022 9:40 am
Misty, an American is a currency dealer, based in New York, has
$ 400,000 that he wishes to invest in Kenya.
The investment particulars are:
Kenya
USA
Interest rate
10% p.a
6% p.a
Spot rate
Kes. 109/H
Forward Rate
Ksh 110/
Required:
(a) Compute and explain the quantum
covered interest arbitrage
(b) Explain how a portfolio investor would gain from covered
interest arbitrage
$ 400,000 that he wishes to invest in Kenya.
The investment particulars are:
Kenya
USA
Interest rate
10% p.a
6% p.a
Spot rate
Kes. 109/H
Forward Rate
Ksh 110/
Required:
(a) Compute and explain the quantum
covered interest arbitrage
(b) Explain how a portfolio investor would gain from covered
interest arbitrage