Suppose That What Arbitrage Gains Can Be Achieved If the Bank Quotes

question 78

Multiple Choice

Suppose that: $$\begin{array} { | l | c | c | c | } \hline & \text { Spot Rate } & \text { 3 Month Forward Rate } & \text { 1 Year Forward Rate } \\\hline \text { sweden (krona) } & 9.3924 & 9.4554 & 9.6239 \\\hline \text { switzerland (frarc) } & 1.5231 & 1.5206 & 1.5143 \\\hline \text { Japan (Yer) } & 123.380 & 122.81 & 120.63 \\\hline\end{array}$$ What arbitrage gains can be achieved if the bank quotes a rate of 75Yen per Swiss Francs?

• A)8%
• B)9%
• C)10%
• D)11%

---

Definitions:

Nucleus

The membrane-bound organelle in eukaryotic cells that contains the genetic material (DNA).

Plant Hormones

Chemical substances produced in plants that regulate growth, development, and responses to environmental stimuli.

Organic Molecules

Compounds containing carbon that are typically found in living systems, including proteins, lipids, carbohydrates, and nucleic acids.

Alternation of Generations

A lifecycle in certain plants and algae that alternates between a sexual phase (gametophyte) and an asexual phase (sporophyte).