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Tony Fernandes, a foreign exchange trader in Canada, has CAD. 4,000,000 for short-term money market investment and wants to make profit based on the following rates. Explain specific steps that Tony Fernandes must take to make a covered interest arbitrage. 6-month Canadian interest rate: 1.60% per annum 6-month Yen interest rate: 2.95% per annum Spot rate: JYP 93.1395/CAD. 6-month Forward Rate JYP 93.8380/CAD. CAD = Canadian Dollar JYP = Japanese Yen

Tony Fernandes, a foreign exchange trader in Canada, has CAD. 4,000,000 for short-term money market investment and wants to make profit based on the following rates. Explain specific steps that Tony Fernandes must take to make a covered interest arbitrage. 6-month Canadian interest rate: 1.60% per annum 6-month Yen interest rate: 2.95% per annum Spot rate: JYP 93.1395/CAD. 6-month Forward Rate JYP 93.8380/CAD. CAD = Canadian Dollar JYP = Japanese Yen

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Tony Fernandes, a foreign exchange trader in Canada, has CAD. 4,000,000 for
short-term money market investment and wants to make profit based on the
following rates. Explain specific steps that Tony Fernandes must take to make
a covered interest arbitrage.
6-month Canadian interest rate: 1.60% per annum
6-month Yen interest rate: 2.95% per annum
Spot rate: JYP 93.1395/CAD.
6-month Forward Rate JYP 93.8380/CAD.
CAD = Canadian Dollar
JYP = Japanese Yen

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