1. The exchange rate between US dollars and Euros is currently $1.52/€. The risk free interest rate is currently 2.9% for US Dollar deposits, and 7.6% for Euro deposits. The one-year futures price of Euros is 1.3589. Is there an arbitrage opportunity?
a. Yes, buy euro futures and sell euros at 1.5200
b. no, there is no arbitrage opportunity here
c. Yes, buy euros at 1.5200 and sell euro futures
d. Impossible to answer based on information given
2. The exchange rate between US dollars and Euros is currently $1.18/€. The risk free interest rate is currently 5.5% for US Dollar deposits, and 7.3% for Euro deposits. What should the price of Euros be on a six-month forward contract?
a. 1.1907
b. 1.1920
c. 1.1885
d. 1.1950
e. 1.1694