Question

can u help me to explain where the number 523,000 in the solution coming from?

c) 165.0. e Thailand Bhat and the 291 An investor examines the following rate quotes for the Thaila Indian Rupee. 4.6% INR 1-year interest rate Spot rate INR/THB 2.1026 2.1287 3.5% THB 1-year interest rate Forward rate INR/THB If the investor shorts INR500,000 he will achieve a risk-free arbitrage (in INR) closest to: A) 856 B) 924 c) 1035

Answer 1

Spot value = INR500,000

Future value = spot value*(1+rate)

Future value = INR500,000"(1+4.6%)

Future value = INR523,000