Assume the Following Information:
You Have $900,000 to Invest If You Conduct Covered Interest Arbitrage, What Is the Dollar

question 15

Multiple Choice

Assume the following information:
You have $900,000 to invest:
$$\begin{array}{l}\text { You have } \$ 900,000 \text { to invest: }\\\begin{array} { l l l } \text { Current spot rate of Australian dollar (AS) } & = & \$ .62 \\\text { 180-day forward rate of the Australian dollar } & = & \$ .64 \\\text { 180-day interest rate in the U.S. } & = & 3.5 \% \\\text { 180-day interest rate in Australia } & = & 3.0 \%\end{array}\end{array}$$
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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