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Suppose That What Arbitrage Gains Can Be Achieved If the Bank Quotes

Question 21

Multiple Choice

Suppose that:  Spot Rate  3 Month Forward Rate  1 Year Forward Rate  sweden (krona)  9.39249.45549.6239 switzerland (frarc)  1.52311.52061.5143 Japan (Yer)  123.380122.81120.63\begin{array} { | l | c | c | c | } \hline & \text { Spot Rate } & \text { 3 Month Forward Rate } & \text { 1 Year Forward Rate } \\\hline \text { sweden (krona) } & 9.3924 & 9.4554 & 9.6239 \\\hline \text { switzerland (frarc) } & 1.5231 & 1.5206 & 1.5143 \\\hline \text { Japan (Yer) } & 123.380 & 122.81 & 120.63 \\\hline\end{array} What arbitrage gains can be achieved if the bank quotes a rate of 75Yen per Swiss Francs?


A) 8%
B) 9%
C) 10%
D) 11%

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