​Assume the Following Information: You Have $900,000 to Invest

question 63

Multiple Choice

​Assume the following information: You have $900,000 to invest:
Current spot rate of Australian dollar (A$)
=
$) 62
180-day forward rate of the Australian dollar
=
$) 64
180-day interest rate in the United States
=
3) 5%
180-day interest rate in Australia
=
3) 0%
​
If you conduct covered interest arbitrage, what is the dollar profit you will have realized after 180 days?

• A) ​$56,903
• B) ​$61,548
• C) ​$27,000
• D) ​$31,500

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Definitions:

Water Pollution

Contamination of water bodies such as lakes, rivers, oceans, and groundwater caused by substances harmful to living organisms.

Environmental Regulation

Laws, policies, and regulations that are designed to protect the environment and regulate the impact of human activities on it.

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Legal rights to possess, use, and dispose of assets including real property and intellectual property.

Economic Efficiency

The condition in which it is impossible to generate a larger welfare from the existing resources. In other words, the situation in which every resource is optimally allocated to serve each individual in the best way while minimizing waste and inefficiency.