Suppose the following conditions exist between the U.S. and Canada. U.S. interest rate = 3.22%. Canadian...

Suppose the following conditions exist between the U.S. and Canada. U.S. interest rate = 3.22%. Canadian interest rate = 3.1%. Spot rate: 1 CAD = .9601 USD. 6 month forward rate: 1 CAD = .9622 USD. Are the conditions of interest rate parity violated? If so, what would be our profit if we engaged in covered interest arbitrage with $10M?

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jeff jeffy answered 1 year ago

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