Covered Interest Arbitrage II: Which Currency to start From?

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Uploaded by on Dec 26, 2009

A brief demonstration on how to find the starting country (currency) for conducting the Covered Interest Arbitrage

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Uploader Comments (csbhatnagar)

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

    $116.67 - $110 = $6.67

  • @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.

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  • Good Video clear and concise and very well explained

  • 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?

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

  • simple and neat, thanks. Now I get it!

  • Excellent

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

  • great teacher thanks

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