Covered Interest Arbitrage II: Which Currency to start From?

[zakirzaidi]

Good Video clear and concise and very well explained

[salsagirl49]

Hello Sir, I actually have a question regarding the investment venue.

Why do we borrow in a country with a higher interest rate and invest in a country with lower interest rate if the interest rate differential is lesser then the forward rate differential? Is it because we mainly profit from the forward rate differential?

[kk03104]

TY! YOU ARE AWESOME. I'M SCORING AN "A" FOR MY PAPER TOMORROW =))))

[clodn]

simple and neat, thanks. Now I get it!

[nilson4]

Excellent

[tolubabs007]

thank you very much...u just helped me a lot.

[Graylien89]

great teacher thanks

[alique087]

Mistake at the end. You would pay back $110 not $100. So the CIA profit is as follows:

$116.67 - $110 = $6.67

[csbhatnagar]

@alique087 Many thanks for pointing this out. The error is inadvertent though. I will make the correction in the description rather than doing the whole video again. Thanks again.

[gwellesley]

Yes it did. Thanks.