Covered Interest Arbitrage
The practice of using favorable interest rate differentials to invest in a higher-yielding currency, and hedging the exchange risk through a forward currency contract. Covered interest arbitrage is only possible if the cost of hedging the exchange ri...
Covered interest arbitrage is an arbitrage trading strategy whereby an investor
capitalizes on the interest rate differential between two countries by using a ...
Covered interest arbitrage is only possible if the cost of hedging the exchange
risk is less than the additional return generated by investing in a higher-yielding ...
Covered interest arbitrage is a trading strategy in which an investor uses a
forward currency contract to hedge against exchange rate risk.
A form of arbitrage that involves switching from a domestic currency that carries a
... this arbitrage refers to the fact that this foreign exchange risk is not covered
through ... Total returns from uncovered interest arbitrage depend considerably
Dec 26, 2009 ... A brief demonstration on the basics of Covered Interest Arbitrage.
Sep 10, 2014 ... Concept of Covered Interest Arbitrage explained in academic context.
Covered interest arbitrage is the process of capitalizing on the interest rate
differential between two countries, while covering for exchange rate risk. Covered
Covered interest arbitrage is a trade in a foreign currency fixed interest security (
usually a government bond) together with a matching forward agreement to ...
Empirical studies of covered interest arbitrage suggest that the parity condition is
not ... theory and that covered interest arbitrage does not entail unexploited.