Use the following information for the next 2 Questions: Current spot rate of euro = $0.79 1-year forward rate of euro = $0.82 1-year deposit rate in U.S. = 14% 1-year deposit rate in Europe = 11%

Question 13

You have $2,000,000 (US dollars) to invest. If you use covered interest arbitrage for a 1-year investment, what will be the amount of U.S. dollars you will have after one year?

Question options:

	$2,280,000.00
	$2,304,303.80
	$1,438,116.00
	$2,138,780.49

Question 14

Continued from the above question, does the cover interest arbitrage work for you as a U.S. investor? (HINT: Calculate the rate of return you (as a investor) get when implementing the covered interest arbitrage. Compare the rate of return you obtain from implementing the covered interest arbitrage and the rate of return you (as a U.S. investor) earn by investing in the U.S. directly. )

Question options:

	Yes, the covered interest arbitrage works because the yield is higher than 11%.
	No, the covered interest arbitrage doe not work because the yield is lower than 11%.
	Yes, the covered interest arbitrage works because the yield is higher than 14%.
	No, the covered interest arbitrage does not work because the yield is lower than 14%.

Assume the following information:

Question 19

Bid Ask C$ in $ (i.e. $/C$) $0.89 $0.90 MYR in $ (i.e. $/MYR) $0.33 $0.34 C$ in MYR (i.e. MYR/C$) MYR2.75 MYR2.76

You have $10,000. Can you use triangular arbitrage to generate a profit?

Question options:

	No, it's impossible to make triangular arbitrage profits.
	Yes, I can earn arbitrage profits of $62,247.06 by the following strategy: (1) Exchange U.S. dollars to MYR at the Ask rate of $0.34/MYR. (2) Exchange MYR to C$ at the Ask rate of MYR2.76/C$. (3) Exchange C$ to U.S. dollars at the Bid rate of $0.89/C$.
	Yes, I can earn arbitrage profits of $83.33 by the following strategy: (1) Exchange U.S. dollars to C$ at the Ask rate of $0.90/C$. (2) Exchange C$ to MYR at the Bid rate of MYR2.75/C$. (3) Exchange MYR to U.S. dollars at the Bid rate of $0.33/MYR.
	Yes, I can earn arbitrage profits of $64,436.36 by the following strategy: (1) Exchange U.S. dollars to MYR at the Bid rate of $0.33/MYR. (2) Exchange MYR to C$ at the Ask rate of C$2.76/MYR. (3) Exchange C$ to U.S. dollars at the Bid rate of $0.89/C$.