Suppose one-year German Treasury bill pays 4.34% and one-year Canadian Treasury bill pays 3%. The current spot exchange rate is 1 Euro (EUR) = 1.3581 Canadian dollar (CAD) and the one-year forward...

Suppose one-year German Treasury bill pays 4.34% and one-year<br>Canadian Treasury bill pays 3%. The current spot exchange rate is<br>1 Euro (EUR) = 1.3581 Canadian dollar (CAD) and the one-year<br>forward exchange rate is 1 EUR = 1.3238 CAD. How much<br>%3D<br>arbitrage profit can an investor earn on an investment value of CAD<br>3 million?<br>

Extracted text: Suppose one-year German Treasury bill pays 4.34% and one-year Canadian Treasury bill pays 3%. The current spot exchange rate is 1 Euro (EUR) = 1.3581 Canadian dollar (CAD) and the one-year forward exchange rate is 1 EUR = 1.3238 CAD. How much %3D arbitrage profit can an investor earn on an investment value of CAD 3 million?

Jun 10, 2022

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Suppose one-year German Treasury bill pays 4.34% and one-year Canadian Treasury bill pays 3%. The current spot exchange rate is 1 Euro (EUR) = 1.3581 Canadian dollar (CAD) and the one-year forward...

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