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Assume the Following Information

question 58

Multiple Choice

Assume the following information:

Given the information in this question, the return from covered interest arbitrage by U.S. investors with $500,000 to invest is ____ percent.
Current spot rate of New Zealand dollar
=$) 41
Forecasted spot rate of New Zealand dollar 1 year from now
=$) 43
One-year forward rate of the New Zealand dollar
=$) 42
Annual interest rate on New Zealand dollars
=8%
Annual interest rate on U.S. dollars
=9%


Definitions:

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