Assume the Following Information

question 30

Multiple Choice

Assume the following information:
You have $1,000,000 to invest
Current spot rate of pound = $1.30
90day forward rate of pound = $1.28
3month deposit rate in U.S.= 3%
3month deposit rate in Great Britain = 4%
If you use covered interest arbitrage for a 90day investment,what will be the amount of U.S.dollars you will have after 90 days

• A) $1,024,000.
• B) $1,030,000.
• C) $1,040,000.
• D) $1,034,000.
• E) none of the above

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Definitions:

Accounting Information

The systematic and comprehensive recording of financial transactions pertaining to a business, which is used for analysis, planning, and decision-making.

Cash Flows

The total amount of money being transferred into and out of a business, particularly affecting its liquidity, operational capabilities, and financial health.

Statement

A record that summarizes financial activities, such as income and expenses, over a specific period.

Design Services

Professional services that envision and plan the construction, functionality, and aesthetics of various projects or components.