1. Business
  2. Finance
  3. spot fx rate is 03500 usdpln you can enter a...

Question: spot fx rate is 03500 usdpln you can enter a...

Question details

Spot FX rate is 0.3500 USD/PLN. You can enter a 2-year forward contract with an exercise price of 4.0000 PLN/USD. market and 10% for USA market, what is the theoretical price of this contract? Is arbitrage possible-if yes, explain why? If arbitrage is possible, what strategy should investor choose in order to get a riskless profit? The rates are fixed in the whole investment period and equal 5% p.a. for Polish

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution