1. The interest rate is 3% on the dollar and 6% on the pound sterling. Also, the current spot rate is $1.6 = £1 and the one-year forward rate is $1.5 = £1. Is there an opportunity for covered interest arbitrage? If yes, what is the arbitrage profit in terms of a percentage?
Select one:
a. Yes, 1.74%.
b. Yes, 2.02%.
c. No.
d. Yes, 4.71%.
e. Yes, 3.87%.
2. Depreciation
A) is a tax deductible non-cash expense.
B) is not a true expense.
C) is deducted from net income.
D) represents a cash outflow on the cash flow statement.