6.15 Statoil of Norway's Arbitrage. 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 U.S. dollar, rather than the Norwegian krone, as its functional currency. Ari Karlsen is a currency trader for Statoil and has immediate use of either $3 million (or the Norwegian krone equivalent). He is faced with the following market rates and wonders whether he can make some arbitrage profits in the coming 90 days. Arbitrage funds available Spot exchange rate (Nok/$) 3-month forward rate (Nok/$) U.S. dollar 3-month interest rate Norwegian krone 3-month interest rate $3,000,000 6.0312 6.0186 5.000% 4.450%
6.15 Statoil of Norway's Arbitrage. 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 U.S. dollar, rather than the Norwegian krone, as its functional currency. Ari Karlsen is a currency trader for Statoil and has immediate use of either $3 million (or the Norwegian krone equivalent). He is faced with the following market rates and wonders whether he can make some arbitrage profits in the coming 90 days. Arbitrage funds available Spot exchange rate (Nok/$) 3-month forward rate (Nok/$) U.S. dollar 3-month interest rate Norwegian krone 3-month interest rate $3,000,000 6.0312 6.0186 5.000% 4.450%
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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Transcribed Image Text:6.15 Statoil of Norway's Arbitrage. 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 U.S.
dollar, rather than the Norwegian krone, as its functional
currency. Ari Karlsen is a currency trader for Statoil and
has immediate use of either $3 million (or the Norwegian
krone equivalent). He is faced with the following market
rates and wonders whether he can make some arbitrage
profits in the coming 90 days.
Arbitrage funds available
Spot exchange rate (Nok/$)
3-month forward rate (Nok/$)
U.S. 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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