Question
You run a hedge fund with a line of credit that allows you to borrow $100 million at an annual interest rate of 5%. The
You run a hedge fund with a line of credit that allows you to borrow $100 million at an annual interest rate of 5%. The minimum amount of time that you can borrow for is one day. There are 365 days in a year. The spot rate for a euro is $1.13. The spot rate for a yen is $0.0090. The spot rate between yen and euros is ¥130/€. Which currencies should you buy or sell to take advantage of arbitrage opportunities? How much money can you make in one round trip in one day if prices don’t change?
You run a hedge fund with a line of credit that allows you to borrow $100 million at an annual interest rate of 5%. The minimum amount of time that you can borrow for is one day. There are 365 days in a year. The spot rate for a euro is $1.13. The spot rate for a yen is $0.0090. The spot rate between yen and euros is ¥130/€. Which currencies should you buy or sell to take advantage of arbitrage opportunities? How much money can you make in one round trip in one day if prices don’t change?
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There is no arbitrage opportunity in this scenario based on the information providedHeres why Triang...
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Intermediate Accounting IFRS
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
3rd edition
1119372933, 978-1119372936
