COVERED INTEREST ARBITRAGE
Investment strategy in which investor employs a forward contract to hedge against exchange rate risk. It uses favorable interest rate differentials to invest in a higher-yielding currency, and hedges the exchange perils through a forward currency contract. This is feasible if the cost of hedging the exchange risk is lower than the additional return generated by investing in a higher yielding currency. An investor who employs this strategy makes sport and forward market transactions at the same time, seeking to obtain riskless profit by combining currency pairs.
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Transaction
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2. In accounting, an event or condition aff ...
IRS Publication 596
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Depository Trust Company Tracking - DTCT
A service, used by underwriting firms, that provides a method of tracking the exact path of purchases and sales of newly issued securities.
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