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1. Heidi Hoi Jensen is now evaluating the arbitrage profit potential in the same market after interest rates change. (Note that any time the difference in interest rates does not exactly equal the forward premium, it must be possible to make a CIA profit one way or another). | Arbitrage fund available Spot exchange rate (kr/S) 3-month forward rate (kr/S) U.S. dollar 3-month interest rate Danish kroner 3-month interest rate $5,000,000 6.1720 6.1980 4.000% 5.000%

1. Heidi Hoi Jensen is now evaluating the arbitrage profit potential in the same market after interest rates change. (Note that any time the difference in interest rates does not exactly equal the forward premium, it must be possible to make a CIA profit one way or another). | Arbitrage fund available Spot exchange rate (kr/S) 3-month forward rate (kr/S) U.S. dollar 3-month interest rate Danish kroner 3-month interest rate $5,000,000 6.1720 6.1980 4.000% 5.000%

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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1. Heidi Hoi Jensen is now evaluating the arbitrage profit potential in the same market after interest rates change. (Note that any time the difference in interest rates does not exactly equal the forward premium, it must be possible to make a CIA profit one way or another). Arbitrage fund available Spot exchange rate (kr/S) 3-month forward rate (kr/S) U.S. dollar 3-month interest rate Danish kroner 3-month interest rate S5,000,000 6.1720 6.1980 4.000% 5.000%
Transcribed Image Text:1. Heidi Hoi Jensen is now evaluating the arbitrage profit potential in the same market after interest rates change. (Note that any time the difference in interest rates does not exactly equal the forward premium, it must be possible to make a CIA profit one way or another). Arbitrage fund available Spot exchange rate (kr/S) 3-month forward rate (kr/S) U.S. dollar 3-month interest rate Danish kroner 3-month interest rate S5,000,000 6.1720 6.1980 4.000% 5.000%
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