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Q4. Determine the amount of arbitrage profit available from the following market conditions (show all...

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Finance

Q4. Determine the amount of arbitrage profit available from the following market conditions (show all workings) starting with 10 lots in the base currency:

a. Spot AUD/RUB: 79.7794

b. 6-month forward is 87.7782

c. AUD uses Actual/365-day count

d. RUB uses 30/360-day count e. Days in this 6-month period are 182

f. AUD 1 year interest rate is 0.65% g. RUB 1-year interest rate is 19.85%

5. What is the underlying assumption for the carry trade to be profitable?

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