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Question 1: (a) You are provided with the following spot and forward rates between the Canadian dollar and the US dollar Spot rate:0.9277 CAD/S 3-month
Question 1: (a) You are provided with the following spot and forward rates between the Canadian dollar and the US dollar Spot rate:0.9277 CAD/S 3-month Forward rate: 09772 CAD/S 9-month Forward rate: 09821 CAD/S Based on the spot and forward rates, do you expect the Canadian dollar to weaken or strengthen against the US dollar? Explain your answer. is the US dollar trading at a premium or discount, assuming you use the 9-month forward rate? Explain your answer (b) The following spot rates are provided to you: Al hilal bank 0.9656 CADIS HSBC 1.2616 $/ Citibank 0.8275 /CAD Using the above rates, demonstrate how a triangular arbitrage can be profitable, assuming you have $750,000. Show your workings
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