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A currency dealer can borrow $850,000 (or the equivalent in euros) for one year. The one year interest rate is 6.60% in the U.S. and
A currency dealer can borrow $850,000 (or the equivalent in euros) for one year. The one year interest rate is 6.60% in the U.S. and 4.10% in the euro zone. The spot exchange rate is $1.3016/ 1.00 and the one year forward exchange rate is $1.3089/1.00. What arbitrage profit results if the trader borrows the maximum available funds? 20,230.37 OR $26,479.53 21,250.00 OR $27,814.13 19,219.05 OR $25,155.81 26,137.50 OR $34,211.37 12,443.53 OR $16,287.34 16,287.33 OR $21,318.49
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