How much profit can be made with covered interest arbitrage

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Reference no: EM132008801

Assume the following information:

1-year interest rate on U.S. dollars = 10.2%

1-year interest rate on Singapore dollars = 9.4%

Spot rate of Singapore dollar = 0.4 USD/SGD

1-year forward premium on Singapore dollars = 3.78%

Given this information, how much profit can be made with covered interest arbitrage, by borrowing 1 million USD?

Reference no: EM132008801

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