a) You are a U S based treasurer with $1,000,000 to invest The dollar euro exchange rate is quoted as $1 60 1 00 and the dollar pound exchange rate is quoted at $2 00 1 00 If a bank quotes you a cross rate of 1 00 1 20 how much money can an astute trader make b) A U S based currency dealer has good credit and can borrow $1,000,000 for one year The one year interest rate in the U S is is 2 and in in the euro zone the one year interest rate is i 6 The spot exchange rate is $1 25 1 00 and the one year forward exchange rate is $1 20 1 00 Show how to realize a certain dollar profit via covered interest arbitrage c) Suppose that you are the treasurer of IBM with an extra $1000,0000 to invest for six months You are considering the purchase of U S T bills that yield 1 810 (that's a six month rate, not an annual rate by the way) and have a maturity of 26 weeks The spot exchange rate is $1 00 x100, and the six month forward rate is $1 00 x 110 What must the interest rate in Japan (on an investment of comparable risk) be before you are willing to consider investing there for six months

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a) You are a U.S.-based treasurer with $1,000,000 to invest. The dollar-euro exchange rate is quoted as $1.60 = 1.00 and the dollar-pound exchange

a) You are a U.S.-based treasurer with $1,000,000 to invest. The dollar-euro exchange rate is quoted as $1.60 = 1.00 and the dollar-pound exchange rate is quoted at $2.00 =

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