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7. Currency forwards, futures, options i)Describe the daily marking to market process in currency futures markets in three to four sentences. Draw graphs, if necessary,

7. Currency forwards, futures, options

i)Describe the daily marking to market process in currency futures markets in three to four sentences. Draw graphs, if necessary, to complete your answer.

ii) What are the two main differences between currency forward contracts and currency options? What are the benefits from using currency options?

OR ii) What is meant by covered interest arbitrage? What steps are followed to exploit the arbitrage opportunity? How do you identify the opportunity?

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