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What is covered interest arbitrage profit

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You observe the one-year interest rates in the US and Canada are 2.5% and 3.5%, respectively. the current spot rate is $0.92/CAD and the one year- forward rate is $0.94/CAD. You have a $1,000,000 line of credit in the US and a CAD 1,500,000 line of credit in Canada.

Problem 1: Suppose you decide to undertake covered interest arbitrage. What is your covered interest arbitrage profit (to the nearest dollar)

Reference no: EM132928840

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