The spot exchange rate today for the number of Swedish Krona (SEK) per Euro (EUR) is 5.20 SEK = 1 EUR. The annualized Swedish LIBOR interest rate (for the three month period starting today) is 4%. The annualized Euro LIBOR interest rate (for the three month period starting today) is 8%. Assume three months is exactly .25 years.

What is the three month forward rate for the Swedish Krona (SEK) per Euro (EUR) in four decimal places.

Suppose that a bank is actually quoting the three month forward rate for the Swedish Krona (SEK) per Euro (EUR) as 5.0500 – 5.0600. Suppose you are allowed to borrow 2 mio EUR today at 8%. How many EUR arbitrage profit can you make? Give your answer to the nearest EUR.

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The three month forward rate for the Swedish Krona SEK per Euro EUR in four decimal places i... View the full answer