Assume the following information: U.S. investors have $1,000,000 to invest 1-year deposit rate offered on U.S. dollars = 12% 1-year deposit rate offered on Singapore dollars= 10% 1-year forward rate

Assume the following information: U.S. investors have $1,000,000 to invest 1-year deposit rate offered on U.S. dollars = 12% 1-year deposit rate offered on Singapore dollars= 10% 1-year forward rate of Singapore dollars = $0.412 Spot rate of Singapore dollar = $0.400 Should a U.S. based investor Covered interest arbitrage and invest in Singapore? Answer Yes because the return would be 14.23% No because the return would be 14.23% Yes because the return would be 13.3% No because the return would be 13.3%

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