Question
QUESTION 12 A currency dealer has good credit and can borrow either $1,000,000 or 800,000 for one year. The one-year interest rate in the U.S.
QUESTION 12
A currency dealer has good credit and can borrow either $1,000,000 or 800,000 for one year. The one-year interest rate in the U.S. is i$ = 1% and in the euro zone the one-year interest rate is i = 3%. The one-year forward exchange rate is $1.30/ ; what must the spot rate be to eliminate arbitrage opportunities?
| A. | $1.2471/ | |
| B. | $1.1547/
| |
| C. | 1.2748/$ | |
| D. | $1.3257/ | |
| E. | 1.2509/$ |
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Consolidation In The European Financial Industry
Authors: R. Bottiglia, E. Gualandri , G. Mazzocco
1st Edition
0230233228,0230275028
