Question
Suppose a one year US treasury bill pays 1.44% and a one year Germany treasury bill pays 3.38%. Currently the spot exchange is 1EUR =
Suppose a one year US treasury bill pays 1.44% and a one year Germany treasury bill pays 3.38%. Currently the spot exchange is 1EUR = 1.237 USD and the one-year forward exchange rate is 1EUR = 1.26 USD. What arbitrage profit can an investor earn on an investment value of USD 1 million?
do not round respite until the final answer to 2 decimal places please!!
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Managerial Economics and Organizational Architecture
Authors: James Brickley, Clifford W. Smith Jr., Jerold Zimmerman
6th edition
73523143, 73523149, 978-0073523149
