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QUESTION 9 The spot exchange rate offered by a Market Maker between Euro and British Pound is, in British Pounds, 1 = 2. You also
QUESTION 9 The spot exchange rate offered by a Market Maker between Euro and British Pound is, in British Pounds, 1 = 2. You also know that on the open market you can trade these 2 currencies for US $ at the following rates: 1=$0.3, 1=S0.6 Is there an arbitrage opportunity? QUESTION 10 On the open market you can trade (Euro) and (British Pound) for US S at the following rates: 1=$0.5, 1=$0.5 What is the value of in terms of ? QUESTION 11 Term Structure of Interest Rates 6% 4% 2.5% 2% 1.5% 3 4 months months 6 months Suppose that the cost of foreign currency expressed in units of local currency, equal to 1. What is F6 months, that is the cost of foreign currency for delivery in 6 months
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