ABC Corp. has $964,113 cash to invest in the foreign exchange market for a year. The...

ABC Corp. has $964,113 cash to invest in the foreign exchange market for a year. The following quotes were obtained from the bank:

Current spot ask rate of the pound is $1.2199/£ and the 360-day forward rate of the pound is $1.169/£. The 1-year period interest rate in the US is 2.42% and the 1-year period interest rate in the UK is 2.34%.

Is there an arbitrage opportunity? If so, calculate the arbitrage profit (in dollars) and write your answer in the answer box. If there is no arbitrage opportunity then write "0.00" in the answer box.

Expert Solution

jeff jeffy answered 1 year ago

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