Imagine visiting overseas, where you win the local lottery and can buy any foreign car you wish and will pay full retail price using the local currency, payable in three months. You have determined that you have enough cash at your bank in New York City, which pays 0.35 percent interest per month, compounding monthly, to pay for the car. There are two ways to pay for your car:
Keep the funds at your bank in the United States and buy a forward contract to pay for the car.
Buy a certain currency amount spot today and invest the amount in the foreign bank for three months so that the maturity value becomes equal to the price of the car.
Analyze the two alternatives presented and make a recommendation on purchasing the car. How could this purchase opportunity be considered arbitrage? Be sure to provide calculations for your recommendation showing the best alternative. What are the advantages of the alternative that you have selected? Respond to at least two of your classmates’ postings.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more