Home > Term: covered interest arbitrage
covered interest arbitrage
A combination of transactions on two countries' securities and exchange markets designed to profit from failure of covered interest parity. A typical set of transactions would include selling bonds in one market, using the proceeds to buy spot foreign currency and foreign bonds, and selling forward the return at a future date. See also one-way arbitrage.
- Part of Speech: noun
- Industry/Domain: Economy
- Category: International economics
- Company: University of Michigan
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Creator
- Noroc
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