Assume the Following Information

question 29

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 U.S.= 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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