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solve asap e. The exchange rate CRXCRY is 1.5 today. The risk-free interest rate of CRX is 2% and the risk-free interest rate of CRY

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e. The exchange rate CRXCRY is 1.5 today. The risk-free interest rate of CRX is 2% and the risk-free interest rate of CRY is 3%. i. What should the 1 year forward exchange rate be in order to avoid the possibility of arbitrage (state to 4 decimal places)? [2 marks] ii. In reality we tend to have arbitrage bounds, rather than a single value. Please explain why this is. [2 marks ] [Total for Question 4: 17 marks]

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