Question
Assume the spot rate is $1.50/. The annualized 4-month interest rate is 7.5% in US and 5.1% in the UK. 4-month forward rate is quoting
Assume the spot rate is $1.50/. The annualized 4-month interest rate is 7.5% in US and 5.1% in the UK. 4-month forward rate is quoting 1.48 US dollar for each pound. You can borrow as much as $1,500,000 or 1,000,000. Determine the arbitrage profit.
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Personal Finance
Authors: Megan Noel, Dan French
2nd Edition
1465246479, 9781465246479
