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Exchange Rate Se(5/6) $1.45 €1.00 F360 ($/) $1.48 - €1.00 Options: A. $159.22 B. $153.10 C. $439.42 D. none of the options Interest Rate APR is 4% 3%

Exchange Rate Se(5/6) $1.45 €1.00 F360 ($/) $1.48 - €1.00 Options: A. $159.22 B. $153.10 C. $439.42 D. none of the options Interest Rate APR is 4% 3%

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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Suppose you observe the following one-year interest rates, spot exchange rates and futures prices. Futures contracts are available on €10,000. How much risk-free arbitrage profit could you make on one contract at maturity from this mispricing? Exchange Rate Se($/€) $1.45 = €1.00 F360 ($/) $1.48 = €1.00 Interest Rate APR is 4% 3% Options: A. $159.22 B. $153.10 C. $439.42 D. none of the options
Transcribed Image Text:Suppose you observe the following one-year interest rates, spot exchange rates and futures prices. Futures contracts are available on €10,000. How much risk-free arbitrage profit could you make on one contract at maturity from this mispricing? Exchange Rate Se($/€) $1.45 = €1.00 F360 ($/) $1.48 = €1.00 Interest Rate APR is 4% 3% Options: A. $159.22 B. $153.10 C. $439.42 D. none of the options
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