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The spot rate is 3.8.You engage in a forward contract at a rate of 4.6.The contract has a maturity of one year,which means that you
The spot rate is 3.8.You engage in a forward contract at a rate of 4.6.The contract has a maturity of one year,which means that you will use the contact one year later.The interest rate in TL(Turkish Lira) is 0.24 . The interest rate in US $ is 0.04 .What is the rate of depreciation in TL? How can you arbitrage the situation ? What will you arbitrage return be in percentages?
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