Examine if CIA is possible.

You can only use the current (no more than one week old) rates

Find the Profit assuming that you have $1M USD (Profit must be in USD)

Find the Direction of Arbitrage (Remember the CIA is one way transaction.

Find the IRP (Must show how it is quoted and the symbol)

Use One year Interest Rate

You can use graph, table or excel.

• Euro to United States (USD)

  • .84 Euro = $1 USD

  • Spot= 1.19

  • Forward Rate- 1.19

  • Amount in USD- $1,000,000

Euro One Year Interest Rate- -0.50329 %

• Euro Borrowing Rate- 1.9

• Euro Deposit Rate- -.5

• USD Borrowing Rate- 3.25

• USD Deposit Rate- 1.93