The interest rate at the European Central Bank is 8.91% p.a. while the rate in the U.S. is 8.10% p.a.. Speculators predict a further weakening euro throughout this year. The current spot rate for the euro is $1.26 with a 6-month forward exchange rate of $1.206. Based on the information, what would be your profit with an appropriate arbitrage strategy assuming that you can borrow 100 $ or 100 €?

Answer rating: 100% (QA)

Initt rale in Ecuopean that have in US market Spot Rale 1 126 6 months fo... View the full answer