Question: 7. What should be the difference in the risk free interest rates in PLN and in EUR (as: TPLN-rEUR), if currently the three-month contract for

7. What should be the difference in the risk free interest rates in PLN and in EUR (as: TPLN-rEUR), if currently the three-month contract for EUR is quoted at 424.58PLN/100EUR and the current exchange rate is 4.31PLN/EUR. Also the arbitrage is not possible now. Please assume continuous interest rate capitalization and 30/360 time convention. a) 8% b) 4% c) should be negative. d) 10%

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