Exhibit 7-1 Assume the Following Information

question 14

Multiple Choice

Exhibit 7-1
Assume the following information:
You have $300,000 to invest:
The spot bid rate for the euro (€) is $1.08
The spot ask quote for the euro is $1.10
The 180-day forward rate (bid) of the euro is $1.08
The 180-day forward rate (ask) of the euro is $1.10
The 180-day interest rate in the U.S. is 6%
The 180-day interest rate in Europe is 8%
-Refer to Exhibit 7-1. If you conduct covered interest arbitrage, what amount will you have after 180 days?

• A) $318,109.10.
• B) $330,000.00.
• C) $312,218.20.
• D) $323,888.90.
• E) none of the above

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Definitions:

Agreement

A mutual understanding or arrangement between two or more parties, typically formalized by a contract, concerning their rights and responsibilities.

Minds

Refers to the intellectual or cognitive capabilities of individuals, including thoughts, perceptions, and consciousness.

Contract

A legally binding agreement between two or more parties that outlines obligations and provisions for each party.

Genuineness Of Assent

A legal principle stipulating that all parties involved in a contract must genuinely agree to the contract's terms for it to be valid and enforceable.