The spot price of Euro is $1.3000, and the one-year forward price of Euro is $1.2900. Determine the correct forward price and recommend an arbitrage strategy.

The time needed to complete a final examination in a particular college course is normally distributed with a mean of 79 minutes and a standard deviation of 8 minutes. Answer the following questions.
January 3, 2018
30 Performed services for $7,325 in cash. 30 Paid $220 for monthly telephone bill, Check 1005.
January 3, 2018

The spot price of Euro is $1.3000, and the one-year forward price of Euro is $1.2900. Determine the correct forward price and recommend an arbitrage strategy.

Finance Basics

Problem: Suppose the US dollar and Euro interest rate for the next one year are 1.5% and 2%, respectively. Both are annually compounded. The spot price of Euro is $1.3000, and the one-year forward price of Euro is $1.2900. Determine the correct forward price and recommend an arbitrage strategy.

 

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