Investors expect that the exchange rate between the euro and the US dollar will change from 1 euro = $1.22 to 1 euro = $1.15. Show what investors (European or US investors) make arbitrage profits. Assume that the interest rate for both markets is 6%. You may choose any amount for the initial investment.
Please refer to the image below for the solution
let me know in the comment section below in case of any doubt.
Get Answers For Free
Most questions answered within 1 hours.