Assume the Following Information:
You Have $1,000,000 to Invest If You Use Covered Interest Arbitrage for a 90-Day Investment

question 90

Multiple Choice

Assume the following information:
You have $1,000,000 to invest:
$\begin{array} { l l l } \text { Current spot rate of pound } & = & \$ 1.30 \\90 \text { - tay forward rate of pound } & = & \$ 1.28 \\\text { 3-month deposit rate in U.S. } & = & 3 \% \\\text { 3-month deposit rate in Great Britain } & = & 4 \%\end{array}$
If you use covered interest arbitrage for a 90-day 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

---

Definitions:

Human Rights

The fundamental rights and freedoms that all individuals are entitled to regardless of nationality, sex, national or ethnic origin, race, religion, language, or any other status.

Liquidated Damages

Pre-determined damages specified in a contract that the parties agree on as compensation if one party breaches the contract.

Option To Terminate

A provision in a contract that allows one or more parties to end the agreement under certain conditions, before the completion date.

Force Majeure

A major, unforeseen, or unanticipated event that occurs and prevents the performance of a contract.