πŸ“’ Too many exams? Don’t know which one suits you best? Book Your Free Expert πŸ‘‰ call Now!


    Question

    Covered Interest Arbitrage

    involves:
    A Borrowing in domestic currency Correct Answer Incorrect Answer
    B Converting to foreign currency Correct Answer Incorrect Answer
    C Investing abroad and covering with forward contract Correct Answer Incorrect Answer
    D All of the above Correct Answer Incorrect Answer

    Solution

    Covered interest arbitrage: Borrow domestic β†’ Convert to foreign β†’ Invest abroad β†’ Sell forward foreign currency β†’ Repay domestic loan β†’ Profit from interest differential after covering exchange risk.

    Practice Next
    More Foreign Exchange Questions
    ask-question