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How much is your arbitrage profit in Euros at expiration, if you know that the current exchange rate is  Euro 1.2...

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Finance

How much is your arbitrage profit in Euros atexpiration, if you know that the current exchange rateis 


Euro 1.2 / GBP,  the 60-day  forwardrate is Euro 1.18 /GBP, the risk free rate in Europe is 2% andthe risk free rate in the UK is 3.2%?


Make your calculation so that the spot transaction isfor GBP 500,000.


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Transcribed Image Text

How much is your arbitrage profit in Euros atexpiration, if you know that the current exchange rateis Euro 1.2 / GBP,  the 60-day  forwardrate is Euro 1.18 /GBP, the risk free rate in Europe is 2% andthe risk free rate in the UK is 3.2%?Make your calculation so that the spot transaction isfor GBP 500,000.

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