Q. Covered interest arbitrage involves both (Solved)
1. the purchase of a foreign asset and a forward contract in the market for foreign exchange.
2. the purchase of a domestic asset and a spot contract in the market for foreign exchange.
3. the sale of a foreign asset and the purchase of a forward contract in the market for foreign exchange.
4. the sale of domestic stocks and the purchase of foreign bonds.
- d. the sale of domestic stocks and the purchase of foreign bonds.