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Author Question: Which of the following is NOT true with respect to interest rate arbitrage? (Read 26 times)

kfurse

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on: Apr 25, 2021

Question 1

What is the maximum net profit to a speculator with $1 million if interest rates on 1-year Treasuries are 6% in France, 4% in the United States and the exchange rate is expected to change from today's rate of 2Fr/$ to 2.1Fr/$ in 1 year?
◦ $1,060,000
◦ $1,005,683
◦ $1,040,000
◦ $1,050,000
◦ $1,009,524

Question 2

Which of the following is NOT true with respect to interest rate arbitrage?
◦ Interest rate arbitrage maintains the interest rate parity relationship.
◦ To arbitrage, you buy and sell something so that you have a positive investment and then earn a return on the transaction.
◦ It is rare that similar risk investments in one country earn more than another country after converting money to and from the foreign currency using spot and forward exchange rates.
◦ Arbitrageurs help exchange rates adjust to their correct levels rapidly and accurately.
◦ All of these are true.
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
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Marked as best answer by kfurse on Apr 25, 2021

IRincones

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Reply #1 on: Apr 25, 2021
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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kfurse

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Reply 2 on: Apr 25, 2021
YES! Correct, THANKS for helping me on my review

tranoy

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Reply 3 on: Yesterday
:D TYSM

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