Question
Use the following information to answer the question. The Canadian annual interest rate is 2 percent. The interest rate in the U.K. is 4 percent.
Use the following information to answer the question. The Canadian annual interest rate is 2 percent. The interest rate in the U.K. is 4 percent. The spot rate is CAD$1.60/. The forward rate is CAD$1.58/ and has a one-year maturity. An arbitrager can borrow a maximum of CAD$1,000,000 or 625,000. What is the net cash flow in one year?
| A. | CAD$238.65 | |
| B. | CAD$14,000 | |
| C. | CAD$46,207 | |
| D. | CAD$11,300 | |
| E. | CAD$7,000 |
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The Economics Of Money Banking And Finance
Authors: Howells, Keith Bain
3rd Edition
0273693395, 978-0273693390
