If the cross exchange rate of two nondollar currencies implied by their individual spot rates with respect to the dollar is less than the cross exchange rate quoted by a bank, locational arbitrage is possible.
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Q44: If interest rate parity (IRP) exists, then
Q45: Locational arbitrage involves investing in a foreign
Q46: Forward rates are driven by the government
Q47: Exhibit 7-1
Assume the following information:
You have $300,000
Q48: The interest rate on euros is 8%.
Q50: If interest rate parity (IRP) exists, then
Q51: Exhibit 7-1
Assume the following information:
You have $300,000
Q52: Assume the following information:
You have $900,000
Q53: To capitalize on high foreign interest rates
Q54: National Bank quotes the following for
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