Assume the Following Information Given the Information in This Question, the Return from Covered

question 11

Multiple Choice

Assume the following information:
$$\begin{array} { l l r } \text { Current spot rate of New Zealand dollar } & = & \$ .41 \\\text { Forecasted spot rate of New Zealand dollar 1 year from now } & = & \$ .43 \\\text { One-year forward rate of the New Zealand dollar } & = & \$ .42 \\\text { Annual interest rate on New Zealand dollars } & = & 8 \% \\\text { Annual interest rate on U.S. dollars } & = & 9 \%\end{array}$$
Given the information in this question, the return from covered interest arbitrage by U.S. investors with $500,000 to invest is ____%.

• A) about 11.97
• B) about 9.63
• C) about 11.12
• D) about 11.64
• E) about 10.63

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Definitions:

Employee Morale

The overall outlook, satisfaction, and confidence that employees feel towards their workplace.

Incentive Plan

A program designed to motivate and reward employees for meeting or exceeding performance and productivity targets.

Company's Success

A company's success is measured by its ability to achieve its goals, financial prosperity, and the satisfaction of its stakeholders.

Exercise Price

The specified price at which an option contract can be executed, commonly used in the context of stock option plans.