Argentina who engages in covered interest arbitrage

Assignment Help Financial Management

Reference no: EM131859986

Today, the one-year U.S. interest rate is 4%, while the one-year interest rate in Argentina is 17%. The spot rate of the Argentine peso (AP) is $.44. The one-year forward rate of the AP exhibits a 14% discount. Determine the yield (percentage return on investment) to an investor from Argentina who engages in covered interest arbitrage. ANSWER IN PERCENTAGE FORMAT

Reference no: EM131859986

Questions Cloud

Largest holders of corporate equities : In the U.S. the largest holders of corporate equities are _________ ; the largest holders of corporate bonds are _______ .

Difficult decisions due to budget cuts : Imagine that you work for a municipality that has had to make some difficult decisions due to budget cuts.

Current thinking in acquisition management : Current thinking in acquisition management holds that buyers should have contractors customize products as much as possible in order to address their specific

Kinds of training-learning-development : What kinds of training/learning/development it is doing, to whom it provides learning services, and why the company decided to use a Corporate University.

Argentina who engages in covered interest arbitrage : Determine the yield (percentage return on investment) to an investor from Argentina who engages in covered interest arbitrage.

How much importance should be given to energy cost situation : Mr. Joe noticed that there is an abundance of enthusiasm about entering the electric car conversion kit building business, but his cautious nature made.

What is remaining margin in account-margin on short position : What is the remaining margin in the account? What is the margin on the short position? What is the rate of return on the investment?

Discuss the relationship for an individual and for a society : What is the relationship between wants, factors of production, scarcity, and choices? Discuss the relationship for an individual and for a society.

Assume that interest rate parity exists : Assume that interest rate parity exists. What is the forward rate of Argentine peso?

User Account

All Pages