What would be your dollar profits from interest arbitrage


One year U.S. interest rates are 10%, and European interest rates are 5%. The spot euro direct exchange rate quote is 1.30 and the 1-year forward rate direct quote is 1.2. If you can borrow either $1 million or euro 1 million to start with, what would be your dollar profits from interest arbitrage based on these data?

Request for Solution File

Ask an Expert for Answer!!
Financial Management: What would be your dollar profits from interest arbitrage
Reference No:- TGS02357294

Expected delivery within 24 Hours