HI All ,
Can you please help in answering the below
Suppose the spot rate is 0.7102 USD/CHF and
Swiss interest Rate = 7.6%
US interest Rate = 5.2%
If the 1 Year forward rate is 0.72 USD/CHF What's the arbitrage opportunity here ?
--
My Understanding :
As per the Interst Rate parity eqn the Forward Rate should be =0.726 where as the quoted price=0.72 only.Hence future price is under quoted and buy futures ?So buy Forward Contract.
Can you please confirm
Thanks in advance
Can you please help in answering the below
Suppose the spot rate is 0.7102 USD/CHF and
Swiss interest Rate = 7.6%
US interest Rate = 5.2%
If the 1 Year forward rate is 0.72 USD/CHF What's the arbitrage opportunity here ?
--
My Understanding :
As per the Interst Rate parity eqn the Forward Rate should be =0.726 where as the quoted price=0.72 only.Hence future price is under quoted and buy futures ?So buy Forward Contract.
Can you please confirm
Thanks in advance