Evaluating the arbitrage profit potential in the same market

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Reference no: EM131517662

Copenhagen Covered. Heidi Hoi Jensen is now evaluating the arbitrage profit potential in the same market after interest rates change. (Note that any time the difference in interest rates does not exactly equal the forward premium, it must be possible to make a CIA profit one way or another.)

Arbitrage funds available $5,000,000

Spot exchange rate (kr/$) 6.1720

3-month forward rate (kr/$) 6.1980

U.S. dollar 3-month interest rate 4.000%

Danish kroner 3-month interest rate 5.000%

Reference no: EM131517662

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