Problem $6$

Which currency is quoted at a premium?

$(Mx\frac{N}{U}SD{)}_{\text{S}\text{p}\text{o}\text{t}}=16\mathrm{.}453$

$(Mx\frac{N}{U}SD{)}_{\text{F}\text{o}\text{r}\text{w}\text{a}\text{r}\text{d}}=16\mathrm{.}624$

Problem $7$

The following indirect quotation of Chinese yuan to American dollar is given as CNY $/$ USD $=$

$7\mathrm{.}2332.$ The $6-$month futures contract rate is set at the level of $7\mathrm{.}2618.$ Interest rates in China and

the USA are $3\mathrm{.}45\%$ and $5\mathrm{.}5\%$ respectively. Is there an interest rate arbitrage opportunity in this

case? Describe the arbitrage transactions step$-$by$-$step. What the annual interest rate in China

should be to disable the interest rate arbitrage?