Question
Spot exchange rate is $1.3148US = 1 Euro. Interest rates are 1% in the U.S. and 3% in the Euro zone. One year futures contract
Spot exchange rate is $1.3148US = 1 Euro. Interest rates are 1% in the U.S. and 3% in the Euro zone. One year futures contract on one million Euros is currently trading at $1.3200 per Euro. To arbitrage, you do which of the following:
A. Long the futures contract
B. Borrow in the U.S.
C. Borrow in the Euro zone
D. Nothing. There is no arbitrage opportunity.
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Carbon Markets Or Climate Finance?
Authors: Axel Michaelowa
1st Edition
0415743435, 978-0415743433
