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- Covered_interest_arbitrage abstract "Covered interest arbitrage is an arbitrage trading strategy whereby an investor capitalizes on the interest rate differential between two countries by using a forward contract to cover (eliminate exposure to) exchange rate risk. Using forward contracts enables arbitrageurs such as individual investors or banks to make use of the forward premium (or discount) to earn a riskless profit from discrepancies between two countries' interest rates. The opportunity to earn riskless profits arises from the reality that the interest rate parity condition does not constantly hold. When spot and forward exchange rate markets are not in a state of equilibrium, investors will no longer be indifferent among the available interest rates in two countries and will invest in whichever currency offers a higher rate of return. Economists have discovered various factors which affect the occurrence of deviations from covered interest rate parity and the fleeting nature of covered interest arbitrage opportunities, such as differing characteristics of assets, varying frequencies of time series data, and the transaction costs associated with arbitrage trading strategies.".
- Covered_interest_arbitrage thumbnail Covered-interest-arbitrage.svg?width=300.
- Covered_interest_arbitrage wikiPageID "1681652".
- Covered_interest_arbitrage wikiPageRevisionID "593791649".
- Covered_interest_arbitrage hasPhotoCollection Covered_interest_arbitrage.
- Covered_interest_arbitrage subject Category:Financial_economics.
- Covered_interest_arbitrage subject Category:Financial_terminology.
- Covered_interest_arbitrage subject Category:Foreign_exchange_market.
- Covered_interest_arbitrage subject Category:International_finance.
- Covered_interest_arbitrage comment "Covered interest arbitrage is an arbitrage trading strategy whereby an investor capitalizes on the interest rate differential between two countries by using a forward contract to cover (eliminate exposure to) exchange rate risk. Using forward contracts enables arbitrageurs such as individual investors or banks to make use of the forward premium (or discount) to earn a riskless profit from discrepancies between two countries' interest rates.".
- Covered_interest_arbitrage label "Arbitraje de tasas de interés".
- Covered_interest_arbitrage label "Covered interest arbitrage".
- Covered_interest_arbitrage sameAs Arbitraje_de_tasas_de_interés.
- Covered_interest_arbitrage sameAs m.05mzds.
- Covered_interest_arbitrage sameAs Q11679922.
- Covered_interest_arbitrage sameAs Q11679922.
- Covered_interest_arbitrage wasDerivedFrom Covered_interest_arbitrage?oldid=593791649.
- Covered_interest_arbitrage depiction Covered-interest-arbitrage.svg.
- Covered_interest_arbitrage isPrimaryTopicOf Covered_interest_arbitrage.
