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I need solution to only question 10.

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I need solution to only question 10.
Answered Same Day Nov 10, 2020

Solution

Ashish answered on Nov 10 2020
165 Votes
Question-
     
     
     
     
     
     
     
     
     
     
     
     
     
     
    Assumptions
     
    Value
     
     
     
    kr Equivalent
     
     
     
     
    A
itrage funds available
     
    $5,000,000
     
     
     
    kr 30,860,000
     
     
     
     
    Spot exchange rate (k
$)
     
    6.1720
    
     
     
     
     
     
     
     
    3-month forward rate (k
$)
     
    6.1980
    
     
     
     
     
     
     
     
    US dollar 3-month interest rate
     
    4.000%
    a)
     
     
     
     
     
     
     
    Danish kroner 3-month interest rate
    5.000%
    a)
     
     
     
     
     
    Solution-
     
     
     
     
     
    
    
     
     
     
     
     
     
     
    Difference in interest rates (ikr - i$)
    1.000%
    
     
     
     
     
     
     
     
    Forward discount on...
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