The exchange rate between dollars and euros

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Reference no: EM131850177

The exchange rate between US dollars and Euros is currently $1.31/€. The risk free interest rate is currently 7.6% for US Dollar deposits, and 3.1% for Euro deposits. The one-year futures price of Euros is 1.4623. Is there an arbitrage opportunity?

a. Yes, buy euros at 1.3100 and sell euro futures

b. Yes, buy euro futures and sell euros at 1.3100

c. Impossible to answer based on information given

d. no, there is no arbitrage opportunity here

Reference no: EM131850177

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