2. Statoil, the national oil company of Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates within the global oil market, it considers the US dollar, rather than the Norwegian krone, as its functional currency. Ari Karlsen is a currency trader for Statoil and has immediate use of either $3 million (or the Norwegian krone equivalent). He is faced with the following market rates and wonders whether he can make some arbitrage profits in coming 90 days. Arbitrage fund available Spot exchange rate (Nok/$) 3-month forward rate (Nok/$) US dollar 3-month interest rate Norwegian krone 3-month interest rate $ 3,000,000 6.0312 6.0186 5.000% 4.450%

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Chapter1: Financial Statements And Business Decisions
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2. Statoil, the national oil company of Norway, is a large, sophisticated, and active participant
in both the currency and petrochemical markets. Although it is a Norwegian company, because
it operates within the global oil market, it considers the US dollar, rather than the Norwegian
krone, as its functional currency. Ari Karlsen is a currency trader for Statoil and has immediate
use of either $3 million (or the Norwegian krone equivalent). He is faced with the following
market rates and wonders whether he can make some arbitrage profits in coming 90 days.
Arbitrage fund available
Spot exchange rate (Nok/$)
3-month forward rate (Nok/$)
US dollar 3-month interest rate
Norwegian krone 3-month interest rate
$ 3,000,000
6.0312
6.0186
5.000%
4.450%
Transcribed Image Text:2. Statoil, the national oil company of Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates within the global oil market, it considers the US dollar, rather than the Norwegian krone, as its functional currency. Ari Karlsen is a currency trader for Statoil and has immediate use of either $3 million (or the Norwegian krone equivalent). He is faced with the following market rates and wonders whether he can make some arbitrage profits in coming 90 days. Arbitrage fund available Spot exchange rate (Nok/$) 3-month forward rate (Nok/$) US dollar 3-month interest rate Norwegian krone 3-month interest rate $ 3,000,000 6.0312 6.0186 5.000% 4.450%
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