Assume the following information: Current spot rate of New Zealand dollar = $.41 Forecasted spot rate of New Zealand dol

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answerhappygod
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Assume the following information: Current spot rate of New Zealand dollar = $.41 Forecasted spot rate of New Zealand dol

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Assume the following information: Current spot rate of New
Zealand dollar = $.41 Forecasted spot rate of New Zealand dollar
six months from now = $.43 Six month forward rate of the New
Zealand dollar = $.44 Six month interest rate on New Zealand
dollars (annual rate) = 8% Six month interest rate on U.S. dollars
(annual rate) = 9% What are the potential profits in USD or NZD
from interest rate arbitrage if you can start with 1,000,000 USD or
1,000,000 NZD?
a. 13.27% b. 58340.20 NZD c. 5.87% d. $115,271
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