Is covered interest arbitrage feasible for US investors

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Problem 1: The one-year interest rate in New Zealand is 12 percent. The one-year U.S. interest rate is 7 percent. The spot rate of the New Zealand dollar (NZ$) is $0.50. The forward rate of the New Zealand dollar is $0.47. Is covered interest arbitrage feasible for U.S. investors? Explain. Do not round intermediate calculations. Round your answer to two decimal places.

Reference no: EM132702097

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