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In: Finance
Statoil's Arbitrage. Statoil, the national oil company of Norway, is a large, sophisticated, and active...
Statoil's Arbitrage. Statoil, the national oil company of Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates within the global oil market, it considers the U.S. dollar, rather than the Norwegian krone, as its functional currency. Ari Karlsen is a currency trader for Statoil, and has immediate use of either $3 million (or the Norwegian krone equivalent). He is faced with the following market rates and wonders whether he can make some arbitrage profits in the coming 90 days.
|
Abitrage funds available |
$ |
3,000,000 |
|
|
Spot exchange rate (Nok/$) |
6.0314 |
||
|
3-month forward rate (Nok/$) |
6.0187 |
||
|
U.S. dollar annual interest rate |
4.999 |
% |
|
|
Norwegian krone annual interest rate |
4.446 |
% |
CIA profit potential is 0.291%, what is the CIA profit amount?
Solutions
Expert Solution
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jeff jeffy answered 3 years agoRelated Solutions
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