If an astute trader finds an arbitrage what is the net cash, Financial Management

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If an astute trader finds an arbitrage what is the net cash

Suppose that the annual interest rate is 5.0 percent in the United States and 3.5 percent in Germany, and that the spot exchange rate is $1.12/€ and the forward exchange rate, with one-year maturity, is $1.16/€. Assume that an arbitrager can borrow up to $1,000,000. If an astute trader finds an arbitrage, what is the net cash flow in one year? A. $10,690 B. $15,000 C. $46,207 D. $21,964.29.

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Financial Management: If an astute trader finds an arbitrage what is the net cash

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