Suppose That the Annual Interest Rate Is 5

question 16

Multiple Choice

Suppose that the annual interest rate is 5.0 percent in the United States and 3.5 percent in Germany, and that the spot exchange rate is $1.12/€ and the forward exchange rate, with one-year maturity, is $1.16/€. Assume that an arbitrager can borrow up to $1,000,000 or €892,857 (which is the equivalent of $1,000,000 at the spot exchange rate of $1.12/€) .
-The net cash flow in one year is

• A) $10,690.
• B) $15,873.
• C) $46,207.
• D) $21,964.

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Definitions:

Bisexual

Characterized by the potential for emotional, romantic, or sexual attraction to people of more than one gender, not necessarily at the same time or in the same way.

Gender Identity

A person's internal perception of their gender identity, which can align with or differ from the gender assigned to them at birth.

Identifies

recognizes or establishes the identity or essential qualities of something or someone.

Genderqueer

A gender identity that does not adhere to traditional binary gender norms, often outside conventional male or female categories.