In: Finance
Assume the following information:
U.S. investors have $1,375,000 to invest | ||
1-year deposit rate offered on U.S. dollars | = | .12 |
1-year deposit rate offered on Singapore dollars | = | 0.105 |
1-year forward rate of Singapore dollars | = | $0.412 |
Spot rate of Singapore dollar | = | $0.40 |
interest rate parity doesn’t exist and covered interest arbitrage by U.S. investors results in a yield of _______ which is above what is possible domestically