The EUR/USD spot quote on the interbank market is 1.2940/43. Euroland interest rates are 2.060/2.125% and US interest rates are 1.464/1.766%. Using this information and round-trip transactions, calculate the range of bid-offer quotes that ensure no arbitrage opportunities exist over a 3-month (92-day) period. Explain how you arrived at your answer. (For calculation purposes, assume 360 days in the financial year.)

Answer rating: 100% (QA)

To ensure no arbitrage opportunities exist over a 3month 92day period we need to calculate the bidof... View the full answer