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4 & 5 pls Q 4 and Q 5 combined: You are a trader (arbitrageur) at Platypus Capital (a hedge fund). You are given the
4 & 5 pls
Q 4 and Q 5 combined: You are a trader (arbitrageur) at Platypus Capital (a hedge fund). You are given the following information. The spot exchange rate today for the number of Norwegian Krona (NOK) per Euro (EUR) is 4.80 NOK = 1 EUR. The annualised Norwegian LIBOR interest-rate (for the three month period starting today) is 4%. The annualised Euro LIBOR interest-rate (for the three month period starting today) is 8%. Assume three months is exactly 0.25 years. Q 4: What is the three month forward rate for the Norwegian Krona (NOK) per Euro (EUR). Give your answer correct to four decimal places. Q 5: Suppose that a bank is actually quoting the three month forward rate for the Norwegian Krona (NOK) per Euro (EUR) as 4.79004.8000. Suppose that you are allowed to borrow 12 mio NOK today (at 4% ). How many NOK arbitrage profit can you make? Give your answer to the nearest NOK. Do your calculations in excel and avoid rounding errors. Q 4 and Q 5 combined: You are a trader (arbitrageur) at Platypus Capital (a hedge fund). You are given the following information. The spot exchange rate today for the number of Norwegian Krona (NOK) per Euro (EUR) is 4.80 NOK = 1 EUR. The annualised Norwegian LIBOR interest-rate (for the three month period starting today) is 4%. The annualised Euro LIBOR interest-rate (for the three month period starting today) is 8%. Assume three months is exactly 0.25 years. Q 4: What is the three month forward rate for the Norwegian Krona (NOK) per Euro (EUR). Give your answer correct to four decimal places. Q 5: Suppose that a bank is actually quoting the three month forward rate for the Norwegian Krona (NOK) per Euro (EUR) as 4.79004.8000. Suppose that you are allowed to borrow 12 mio NOK today (at 4% ). How many NOK arbitrage profit can you make? Give your answer to the nearest NOK. Do your calculations in excel and avoid rounding errors Step by Step Solution
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