Can explain how to get the ans: 344,603 You have the following financial market information. You also have 1.13 million
Posted: Tue Apr 26, 2022 10:45 am
Can explain how to get the ans: 344,603
You have the following financial market information. You also
have 1.13 million Australian dollar (A$) or 3.70 million Thai baht
(THB) to make a profit due to covered interest arbitrage (CIA).
Calculate the profit in A$ or THB if the CIA opportunity exists in
the market.
Ans: 344,603
Bid price
Ask price
THB spot rate
A$0.0414
A$0.0696
THB one-year forward rate
A$0.0466
A$0.0677
A$ spot rate
THB22.6912
THB24.1685
A$ one-year forward rate
THB27.2397
THB29.9632
Deposit rate
Loan rate
Interest rate on A$
2.96%
4.99%
Interest rate on THB
6.73%
8.56%
You have the following financial market information. You also
have 1.13 million Australian dollar (A$) or 3.70 million Thai baht
(THB) to make a profit due to covered interest arbitrage (CIA).
Calculate the profit in A$ or THB if the CIA opportunity exists in
the market.
Ans: 344,603
Bid price
Ask price
THB spot rate
A$0.0414
A$0.0696
THB one-year forward rate
A$0.0466
A$0.0677
A$ spot rate
THB22.6912
THB24.1685
A$ one-year forward rate
THB27.2397
THB29.9632
Deposit rate
Loan rate
Interest rate on A$
2.96%
4.99%
Interest rate on THB
6.73%
8.56%