Question: Please can i get a solution to Question 10 only. The textbook solution did not have a solution. Thank you. Please show the calculations. exchange

Please can i get a solution to Question 10 only. The textbook solution did not have a solution. Thank you. Please show the calculations.

Please can i get a solution to Question 10 only. The textbook

exchange trader at JPMorgan Chase, can invest lion, or the foreign currency equivalent of the short-term funds, in a covered interest arbitra Denmark. Using the following quotes, can Heidiith a covered interest arbitrage (CIA) profit? ake 9. Copenhagen Covered (A). Heidi Hoi Jensen st $s Ti Arbitrage funds available Spot exchange rate (kr/S) 3-month forward rate (kr/S) U.S. dollar 3-month interest rate Danish kroner 3-month interest rate $5,000,000 6.1720 6.1980 3.000% 5.000% 10. Copenhagen Covered (B). Heidi Hi Jensen is now evaluating the arbitrage profit potential in the same market after interest rates change. (Note that any time the difference in interest rates does not exactly equal the forward premium, it must be possible to make a CIA profit one way or another.) Arbitrage funds available Spot exchange rate (kr/S) 3-month forward rate (kr/S) US. dollar 3-month interest rate Danish kroner 3-month interest rate $5,000,000 6.1720 6.1980 4.000% 5.000% . Copenhagen Covered (C). Heidi Hi Jensen is again evaluating the arbitrage profit potential in the same mar- ket after another change in interest rates. (Remember that any time the difference in interest rates does not exactly equal the forward premium, it must be possible to make a CIA profit one way or another.) Arbitrage funds available Spot exchange rate (kr/$) 3-month forward rate (kr/S) $5,000,000 6.1720

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