Question: Table 28.5 shows the annual interest rate (annually compounded) and exchange rates against the dollar for different currencies. Are there any arbitrage opportunities? If so,

Table 28.5 shows the annual interest rate (annually compounded) and exchange rates against the dollar for different currencies. Are there any arbitrage opportunities? If so, how would you secure a positive cash flow today, while zeroing out all future cash flows?

1-Year Forward Exchange Rate* Spot Exchange Rate Interest Rate (%) United States

1-Year Forward Exchange Rate* Spot Exchange Rate Interest Rate (%) United States (dollar) Costaguana (pulga) Westonia (ruple) Gloccamorra (pint) Anglosaxophonia (wasp) 3 23 5 10,000 2.6 17.1 2.3 11,942 2.65 18.2 2.28 4.1

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