Following Exchange and Interest Rate Quotations in 1998 Were Observed

question 37

Multiple Choice

following exchange and interest rate quotations in 1998 were observed: $\begin{array}{|l|c|c|c|c|c|c|c|}\hline&\text {Eurocurrency rates}&&&\text {Exchange rate per \$ }\\\hline& \begin{array}{c}\text { 90-days (\% annum) } \\\text { (Discretely-compounded) }\end{array} && \text { Spot } && \begin{array}{c}\text { 90-day } \\\text { forward }\end{array} \\ \hline & \$ & \text { DM } & £ & \text { DM } & £ & \text { DM } & £ \\\hline\text { Bid: } & 155 / 8 & 77 / 8 & 121 / 4 & 1.881 & 4961 & 1.801 & 4937 \\\hline\text { Ask: } & 16 & 81 / 4 & 13 & 1.843 & 4902 & 1.773 & 4889\\\hline\end{array}$ An arbitrage profit can be obtained by

• A) borrowing pounds and lending dollars
• B) borrowing dollars and lending DM
• C) borrowing DM and lending pounds
• D) there are no arbitrage opportunities

---

Definitions:

Interpretation of Reality

The process by which individuals give meaning to their environment and experiences, often influenced by their beliefs, culture, and psychological state.

Acute Stress Disorder

A short-term condition that occurs right after a traumatic event, characterized by anxiety, detachment, and other severe emotional responses.

Post-Traumatic Stress Disorder

An emotional health disorder caused by enduring or observing a distressing event, illustrated by vivid flashbacks, distressing dreams, and overwhelming anxiety.

Multiple Organ Failures

A critical condition where two or more systems in the body fail simultaneously, often as a result of severe illness or injury.