Discuss the scenario below, as to whether a riskless opportunity exists in the FX market and how

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Discuss the scenario below, as to whether a riskless opportunity exists in the FX market and how to capitalise the opportunity.

Suppose that you can borrow 21 million today. Assume that the current spot rate is 110/AUD and that the 6-month forward rate (Forward /AUD) is Forward /AUD = 107/AUD. The 12-month interest rate on a Yen deposit is 0.1% and on an AUD deposit is 7.5%.

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Management Science The Art of Modeling with Spreadsheets

ISBN: 978-1118582695

4th edition

Authors: Stephen G. Powell, Kenneth R. Baker

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Posted Date: Apr 15, 2024 10:06 AM

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Discuss the scenario below, as to whether a riskless opportunity exists in the FX market and how

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To determine if a riskless opportunity exists in the FX market and how to capitalize on it we need to compare the potential gains from the interest ra... View the full answer

Management Science The Art of Modeling with Spreadsheets

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