Q1a. Consider the following securities for the same Japanese firm traded on an exchange: A one-year zero-coupon bond with par ¥10, 000 currently priced at ¥9, 500. A one-year dual-currency bond with coupon rate 5% on the par ¥10,000 and $100 principal, currently priced at ¥ 10, 100. A one-year forward with forward price $1 = ¥100 traded in the OTC market. Are there any arbitrage opportunities? Why?

Q1a. Consider the following securities for the same Japanese firm traded on an exchange: A one-year zero-coupon bond with par ¥10, 000 currently priced at ¥9, 500. A one-year dual-currency bond with coupon rate 5% on the par ¥10,000 and $100 principal, currently priced at ¥ 10, 100. A one-year forward with forward price $1 = ¥100 traded in the OTC market. Are there any arbitrage opportunities? Why?

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

Problem 1PS

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Please answer all parts with explanations thx
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