Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:Statoil the national oil company of Norway, is a large, sophisticated, and active participant in both the
currency and petropany, 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 (of the Norwegian krone equivalent). He is faced with the following market
rates and wonders whether he can make some arbitrage profits in the incoming 90 days.
Arbitrage funds available $3,000,000
Spot exchange rate (Nok/S) 6.0312
3-month forward rate (Nok/S) 6.0186
U.S. dollar 3-month interest rate 5.000%
Norwegian krone 3-month interest rate 4.450%
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