Covered interest arbitrage

• A portfolio manager invests dollars in an instrument denominated in a foreign currency and hedges his resulting foreign exchange risk by selling the proceeds of the investment forward for dollars.

• Investing dollars in an instrument denominated in a foreign currency and hedging the resulting foreign-exchange risk by selling the proceeds of the investment forward for dollars.


Follow this link for all the terms related to interest.

 Embedded terms in definition
Exchange risk
Foreign currency
Foreign exchange risk
Foreign exchange
Portfolio manager
 Related Terms
Accrued interest
Amortizing interest rate swap
Arbitrage free option pricing models
Arbitrage pricing theory
Base interest rate
Benchmark interest rate
Bond arbitrage hedge funds
Capitalized interest
Cash flow after interest and taxes
Compound interest
Compounded interest
Covered call
Covered call write
Covered call writing strategy
Covered or hedge option strategies
Covered put
Covered warrant
Covered write
Currency arbitrage
Earnings before interest and taxes
Effective annual interest rate
Effective interest rate international context
Equilibrium rate of interest
Forward interest rate
Future value interest factor
Future value interest factor for an annuity
Gross interest
Guaranteed investment interest contract
Index arbitrage
Indication of interest
Interest calculations and related formulas
Interest compounded annually
Interest compounded continuously
Interest coverage
Interest coverage ratio
Interest coverage test
Interest discounted annually present value of reversion
Interest discounted continuously
Interest equalization tax
Interest equivalent factor
Interest impact on accumulation of 1 per period
Interest impact on instalment to amortize or amortization
Interest impact on present value of ordinary annuity of 1 per period
Interest impact on sinking fund factor
Interest on interest
Interest only
Interest only strip
Interest payments
Interest rate
Interest rate agreement
Interest rate buydowns
Interest rate cap
Interest rate ceiling
Interest rate exposure
Interest rate floor
Interest rate on debt
Interest rate parity theorem
Interest rate risk
Interest rate risk management
Interest rate swap
Interest subsidy
Interest tax shield
Market arbitrage
Minority interest
Net interest margin
Nominal interest rate
Nominal interest rate international context
Nominal rate of interest
Open interest
Present value interest factor
Present value interest factor for an annuity
Rate of interest
Real interest rate
Real rate of interest
Risk arbitrage
Risk controlled arbitrage
Riskless arbitrage
Short interest
Simple interest
Spot interest rate
Stated annual interest rate
Structured arbitrage transaction
Swap interest rate
Term structure of interest rates
Term structure of interest rates and volatility
Times interest covered
Times interest earned ratio
Triangular arbitrage
True interest cost

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