Question: Table: Bid Ask Borrowing Lending S 0 ($/) $1.42 = 1.00 $1.45 = 1.00 i$ 4.25% APR 4% APR F360 ($/) $1.48 = 1.00 $1.50

Table: Bid Ask Borrowing Lending

S 0 ($/) $1.42 = 1.00 $1.45 = 1.00 i$ 4.25% APR 4% APR

F360 ($/) $1.48 = 1.00 $1.50 = 1.00 i 3.10% APR 3% APR

a. Calculate the no arbitrage 1-year forward BID exchange rate in $ per that that satisfies IRP from the perspective of a customer.

b. Calculate the no arbitrage 1-year forward ASK exchange rate in $ per that that satisfies IRP from the perspective of a customer.

c. Using your answers for a and b, determine if an arbitrage opportunity exist (please explain fully)

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