# Question: Assume that the annual interest rate on a six month U S

Assume that the annual interest rate on a six-month U.S. Treasury bill is 5%, and use the data presented in Figure to answer the following:

a. Calculate the annual interest rate on six-month bills in Canada and Japan.

b. Suppose that the annual interest rate on a six-month bill in Japan is 0.5%. Illustrate how to exploit this via covered interest arbitrage.

c. Suppose that the annual interest rate on a three-month U.K. government bond is 4%. What is the annual interest rate on a three-month government bond in Switzer-land?

d. Suppose that the actual Swiss interest rate is 0.5%. Illustrate how to conduct covered interest arbitrage to exploit this situation.

a. Calculate the annual interest rate on six-month bills in Canada and Japan.

b. Suppose that the annual interest rate on a six-month bill in Japan is 0.5%. Illustrate how to exploit this via covered interest arbitrage.

c. Suppose that the annual interest rate on a three-month U.K. government bond is 4%. What is the annual interest rate on a three-month government bond in Switzer-land?

d. Suppose that the actual Swiss interest rate is 0.5%. Illustrate how to conduct covered interest arbitrage to exploit this situation.

## Answer to relevant Questions

Assume that the following information is known about the current spot exchange rate between the U.S. dollar and the British pound (£), inflation rates in Britain and the United States, and the real rate of interest—which ...Is buying an option more or less risky than buying the underlying stock? Draw payoff diagrams for each of the positions below (X = strike price). a. Buy a call with X = $50 b. Sell a call with X = $60 c Buy a put with X = $60 d. Sell a put with X = $50 a. A call option expires in three months and has X = $40. The underlying stock is worth $42 today. In three months, the stock may increase by $7 or decrease by $6. The risk-free rate is 2% per year. Use the binomial ...What are some of the common characteristics of those entrepreneurial growth companies that are able to attract venture capital investment? In which industries and states is the majority of venture capital invested?Post your question