STQ6D: [NBAA: P17 INTERNATIONAL FINANCE MAY 2003 Q4b]b) Suppose the interest rate on £ is 15% in London, and the interest rate on a comparable Tanzanian shilling investment in Dar Es Salaam is 10%.
STQ6D: [NBAA: P17 INTERNATIONAL FINANCE MAY 2003 Q4b]b) Suppose the interest rate on £ is 15% in London, and the interest rate on a comparable Tanzanian shilling investment in Dar Es Salaam is 10%. The £ spot rate is TZS1,750 and the one-year forward rate is TZS1,680. REQUIRED:Are there opportunities for covered interest arbitrage? Show relevant computations. (2 Marks)Is there covered interest differential in favor of […]