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What would be the yield to a us investor

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Reference no: EM132740860

Assume the following information:

Quoted Price Spot rate of Canadian dollar. $0.80
90 day forward rate of Canadian dollar $0.78

90 day Canadian interest rate 5%

90 day U.S. interest rate 2.2%

Problem 1: Given this information, what would be the yield (percentage return) to a U.S. investor who used covered interest arbitrage? (Assume the investor invests $4 million.) Round your answer to one decimal place.

Reference no: EM132740860

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