Question

Today, the one-year u.s. interest rate is 4%, while the one-year interest rate in argentina is 17%. the spot rate of the argentine peso (ap) is $.44. the one-year forward rate of the ap exhibits a 14% discount. determine the yield (percentage return on investment) to an investor from argentina who engages in covered interest arbitrage.

Answer 1

Today, the one-year U.S. interest rate is 4%, while the one-year interest rate in Argentina is 17%. ... The one-year forward rate of the AP exhibits a 14% discount. Determine the yield ...