# Question

Consider the following:

Risk-free rate in the United States ......0.04/year

Risk-free rate in Australia ..........0.03/year

Spot exchange rate ............1.67 A$/$

If the market futures price is 1.69 A$/$, how could you arbitrage? Give numerical examples to illustrate.

Risk-free rate in the United States ......0.04/year

Risk-free rate in Australia ..........0.03/year

Spot exchange rate ............1.67 A$/$

If the market futures price is 1.69 A$/$, how could you arbitrage? Give numerical examples to illustrate.

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