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Assume the spot rate is 4 NZD/GBP (NZD= New zealand dollar). One-Year interest rates are : iGBP= 6.5% and iNZD=5.8%) 1. calculate the one-yewr forward

Assume the spot rate is 4 NZD/GBP (NZD= New zealand dollar). One-Year interest rates are : iGBP= 6.5% and iNZD=5.8%)

1. calculate the one-yewr forward NZD/GBP rate

2. suppose the one year forward rate in the market is 4.2 NZD/GBP. Design a trading Strategy to take advantage of the misprosconf and caclulate the arbitrage profits.

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