Question
these are 2 seperate questions 67.8) The spot exchange rate is 102.30/$, the 180-day forward exchange rate is 101.40/$, the 180-day dollar interest rate is
these are 2 seperate questions
67.8) The spot exchange rate is 102.30/$, the 180-day forward exchange rate is 101.40/$, the 180-day dollar interest rate is 4.8% per year, and the 180-day yen interest rate is 3.4% per year. Models suggest that spot will remain close to 101.90/$ over the next 180 days. How much profit does investing $5,000,000 (or its yen equivalent) in a covered interest arbitrage between US dollars and Japanese yen yield?
67.9) The spot exchange rate is 102.30/$, the 180-day forward exchange rate is 101.40/$, the 180-day dollar interest rate is 4.8% per year, and the 180-day yen interest rate is 3.4% per year. Models suggest that spot will remain close to 101.90/$ over the next 180 days. How much profit does investing $5,000,000 (or its yen equivalent) in an uncovered interest arbitrage between US dollars and Japanese yen yield?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started