Question
Turkish interest rates are 4 percent per annum, while US interest rates are at 5 percent per annum. The spot exchange rate is 1.75 Turkish
Turkish interest rates are 4 percent per annum, while US interest rates are at 5 percent per annum. The spot exchange rate is 1.75 Turkish lira per US dollar, while the six-month forward price is 1.70 lira per US dollar. The arbitrage profit that you can generate today by trading one six-month forward contract and other securities is:
| a. | $0.057 |
| b. | $0.137 |
| c. | $0.374 |
| d. | $0.574 |
| e. | None of these answers are correct. |
ANS: A but how?
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Options Trading For Beginners How To Generate Predictable Income And Make A Living Without Taking Big Risks Even If You Re A Complete Beginner
Authors: Greg Middleton
1st Edition
979-8866955046
