Question
Suppose the annual interest rate is 1.5 percent in the U.S. AND 3 percent in Germany, and that the spot exchange rate is $1.57/ euro
Suppose the annual interest rate is 1.5 percent in the U.S. AND 3 percent in Germany, and that the spot exchange rate is $1.57/ euro and the forward exchange rate , with one year maturity is 1.58/ euro . assume that an arbitager can borrow up to $1,000,000 or 625,000 Euros. If an astute trader finds an arbitrage, what is an arbitrage profit in one year?
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Fraud examination
Authors: Steve Albrecht, Chad Albrecht, Conan Albrecht, Mark zimbelma
4th edition
538470844, 978-0538470841
