Profit can be made with covered interest arbitrage

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Assume the following information: 1-year interest rate on U.S. dollars = 11.2% 1-year interest rate on Singapore dollars = 10.4% Spot rate of Singapore dollar = 0.48 USD/SGD 1-year forward premium on Singapore dollars = 3.91% Given this information, how much profit can be made with covered interest arbitrage, by borrowing 1 million USD?

Reference no: EM132053208

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