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Spot: NOK 8.0000/USD Forward: NOK 8.2000/USD 12-month USD Libor: +2.00% 12-month NOK Libor: +8.00% WACC: 10.00% Call option: strike price USD 0.125/NOK, premium USD 0.0025/NOK

Spot: NOK 8.0000/USD

Forward: NOK 8.2000/USD

12-month USD Libor: +2.00%

12-month NOK Libor: +8.00%

WACC: 10.00%

Call option: strike price USD 0.125/NOK, premium USD 0.0025/NOK

Put option: strike price USD 0.125/NOK, premium USD 0.0035/NOK

compute the profits from the covered interest rate arbitrage. you can borrow usd 1M or NOK 8M. compute the final profits in usd and round to the nearest dollar. use the two labor rates.

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