Calculate the all-in-return from the carry trade. Please show the calculation.
The answer is 2.13%
I calculated as: my answer is 2.14%
Old Spot [( 1 + Big factor/ 1 + small factor)] – current Spot = difference
To calculate the return: difference / old spot = 2.14%
Is this the right calculation?
What are the other ways we can solve the carry trade questions? Will the no-arbitrage framework in currency derivatives portion can be also used (Borrow/ Convert/ Invest/ Sell)
I calculated as:
Old Spot [( 1 + Big factor/ 1 + small factor)] – current Spot = difference
To calculate the return: difference / old spot = 2.14%
Is this also the right calculation?