Risk-free covered interest arbitrage

Reference no: EM1333376

Assume that the Citibank trading room is dealing on the following quotations.

Spot Sterling=$1.5000
Euro-Sterling interest rate (6 months) = 11 percent p.a
Euro-$ interest rate (6 months)= 6 percent p.a

Also assume that Barclays is quoting forward sterling (6 months) at $1.4550

a. Describe the transactions you would make to earn a risk-free covered interest arbitrage profits.

b. How much profit would you expect to make?

Reference no: EM1333376

Questions Cloud

Manufacturing cost under previous simple job-costing system : Compute the manufacturing cost per unit for each job under the previous simple job-costing system.

Identify key success factors for implementation : Identify key success factors for implementation Critical succes factors.

Comparison between juvenile delinquent punishment past/prese : Discuss what life may have been like for Peter as a young person in America at this time. How were young people treated in everyday life, and how were their criminal actions handled?

Write down a sql statement to show warehouse : Write down a SQL statement to display the SKU and Description of all items stored in the Seattle, Chicago or New Jersey warhouse. Do not use IN.

Risk-free covered interest arbitrage : Critically discuss the transactions you would make to earn the risk-free covered interest arbitrage profits. How much profit would you expect to make?

Developmental theory in action : Using the developmental theory/model as the most effective change theory/model for the home schooling family and life in the large family.

Maintaining an annotated bibliography : Discuss briefly the advantages and disadvantages of maintaining an annotated bibliography of research data.

Alternative to achieve net income objective : Determine which alternative Almo should select to achieve its net income objective. Show your calculations.

Civil rights movement : How the civil rights movement has contributed to anti-discrimination efforts and the establishment of hate crime legislation and policy.

User Account

All Pages