U.S. investors have $1,000,000 to invest

$2.00

Assume the following information:

U.S. investors have $1,000,000 to invest
1-year deposit rate offered on U.S. dollars = 12%
1-year deposit rate offered on Singapore dollars= 10%
1-year forward rate of Singapore dollars = $0.412
Spot rate of Singapore dollar = $0.400

Should a U.S. based investor Covered interest arbitrage and invest in Singapore? Answer

  • Yes because the return would be 14.23%
  • No because the return would be 14.23%
  • Yes because the return would be 13.3%
SKU: u-s-investors-have-1000000-to-invest Category: