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

---

Definitions:

Serotonin Activity

The biochemical process involving serotonin, a neurotransmitter that plays a significant role in mood regulation, appetite, sleep, and cognition.

Death Ignorers

Individuals or groups who believe that death is not the end of existence, but rather a transition to another state or life.

Depression-related Brain Circuit

Neural pathways in the brain that are associated with the symptoms and regulation of depression.

Significant Loss

A substantial reduction or deprivation of something valued, such as the death of a loved one, loss of a job, or end of a relationship, which can have profound emotional, psychological, or material impacts.