Assume the Following Information: You Have $400,000 to Invest

question 43

Multiple Choice

Assume the following information: You have $400,000 to invest:
Current spot rate of Sudanese dinar (SDD)
=
$) 00570
90-day forward rate of the Sudanese dinar
=
$) 00569
90-day interest rate in the United States
=
4) 0%
90-day interest rate in Sudan
=
4) 2%
​
If you conduct covered interest arbitrage, what amount will you have after 90 days?

• A) $421,213
• B) $419,887
• C) $424,242
• D) $416,068

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Definitions:

Secured

Protected against threat or harm, or in financial terms, backed by collateral.

Venture Capitalist

An investor who provides capital to start-up companies or supports small companies that wish to expand but do not have access to equities markets.

Finance Manager

A professional responsible for managing the financial health of an organization, including planning, organizing, controlling, and monitoring financial resources.

Borrower

An individual or organization that takes something, especially money, from another with the intention of returning it or its equivalent.