For covered interest arbirtrage, can anyone help simplify it for me (I have trouble with currency quotes for some reason in general..) And for this i know there are several steps but is there a way to simplify it or remember it?
“Williams has uncovered a potential arbitrage opportunity in the foreign exchange markets. The current spot rate is $2.00 per BU. The Bundovianrisk-free interest rate is 3% and the one year forward rate is $2.10 per BU. The uS Risk free rate is 5%”
Question :: The Maximum profit from covered interest arbitrage int he USD / BU market by borrowing $1,000 or the bU equivalent is closes to :