If the positive interest rate differential in favour of a foreign monetary centre is 4 percent per year and the foreign currency is at a forward discount of 2 percent per year, roughly how much would an interest arbitrageur earn from the purchase of foreign three-month treasury bills if he or she covered the foreign exchange risk? * 2 percent per annum 6 percent per annum Consider a speculator in U.S. Assume that the three month forward rate, FR = $5/1 and speculator believes that the spot rate in three months will be SR = $6/1. Assume that the current spot rate, SR=$5/1. Suppose the speculator can not borrow . There are zero interest on both dollar deposits(or bills) and euro deposits(bills). The speculator has $50000. Assume that the speculator is rational (profit maximiser) and risk neutral and speculates based on his beliefs. With respect to his decision today, choose the correct alternative. * 1 point -The speculator will forward sell $50000 and he can gain only by proceeding with this step. -The speculator will not enter forward contract and the only way to make gain is to start with exchanging $50000 for pounds today. -The speculator gets same outcome whether he enters forward contract of selling $50000 or exchanges $50000 for pounds today. Assume that the three month Forward Rate, FR= $2/1 . Current spot rate, SR = $1.5/1. An agent/investor can forward sell or forward buy dollars, use his dollars and exchange his dollars for pounds , hold pounds and exchange the pounds back to dollars. There are zero interest on both dollar deposits and euro deposits. Assuming that the agent is rational and has $12000. Also, he can not borrow. Suppose in three months the expected spot rate , SR* = $2/1. Then, * 1 point The agent will forward sell 8000. The agent will forward buy 8000. The agent will not enter any forward contract