This video explains that concept of covered interest arbitrage and also discusses the interest rate parity.
Пікірлер: 6
@abdulmanan83583 жыл бұрын
Sir G good lecture
@zaikokapaya27933 жыл бұрын
sir i need more worked examples on covered interest arbitrage especially on bid and ask question
@cherishenderez48033 жыл бұрын
I hope you can still answer my question. On the interest rate on the euro which is 6.5%, I noticed that you convert it to decimal and multiplied it to the euro 88, 495.58. my question is how it becomes 1.065 from 6.5%? should it be 0.065 when converting 6.5% to decimal? Because there is a huge difference in the answer. when I use 0.065 to multiply the euro it was only 5,752.21 euros and that means the answer for the rate of return would be negative. Also, what would be the interpretation if the answer for the rate of return is negative?
@tanveerahmad77913 жыл бұрын
What time period of the video u r refering to
@cherishenderez48033 жыл бұрын
@@tanveerahmad7791 4:03
@tanveerahmad77913 жыл бұрын
Lets say 88496 is the principal amount that we want to deposit at the interest rate of 6.5%. so first calculate interest amount that would be 88496*.065 ...what ever interest amount u get add it to 88496. This will give u the total amount that u will get after earning interest including principal amount. Using 1.065 give u a short cut and instead of following 2 step procedure u directly get the principal plus interest amount