Can you help me please ? Suppose you observe the following one-year interest rates, spot exchange rates and futures prices. Futures contracts are available on €10,000. How much risk-free arbitrage profit could you make on one contract at maturity from this mispricing? Bid Interest Rate S0($/€) $1.45 = €1.00 i$ 4% F360($/€) $1.47 = €1.00 i€ 3% A) $59.22 B) $53.10 C) $49.42 D) none of the options

Someone, answer that but I don't get it:


A) $59.22

Explanation:

The futures are the contracts that are set in present for settlement at some future date. These contracts can be tailor made or over the counter. Usually futures trade in OTC market with defined contract size. In the given question the contract size is for €10,000. The denomination in dollar will be :

For Bid price : €10,000 * $1.45 / € = 14,500

For Ask price : €10,000 * $1.47 / € = 14,700

The difference in the bid-ask is 200.

The arbitrator could benefit from this price difference.

Lo.2, 3, 9 lori, who is single, purchased 5-years class property for $200,00 and 7-years class property for $420,000 on may 20, 2018. lori experts the taxable income derived form the business (without regard to the amount expensed under ⧠179) to be about $550,000. lori has determined that she should elect immediate ⧠179 expensing in the amount of $520,000, but she doesn’t know which asset she should completely expense under ⧠179. she does not claim any available additional first-year depreciation. a. determine lori’s total cost recovery deduction if the ⧠179 expense is first taken with respect to the 5-year class asset. b. determine lori’s total cost recovery deduction if the ⧠179 expense is first taken with respect to the 7-year class asset. c. what is your advice for lori? d. assume that lori is in the 24% marginal tax bracket and that she uses ⧠179 on the 7-year asset. determine the present value of the tax savings from the depreciation deductions for both assets. see appendix g for present value factors, and assume a 6% discount rate. e. assume the same facts as in part (d), except that lori decides not to use ⧠179 on either asset. determine the present value of the tax savings under this choice. in addition, determine which option lori should choose. f. present your solution to parts (d) and (e) of the problem in a spreadsheet using appropriate microsoft excel formulas. e-mail your spreadsheet to your instructor with a two-paragraph summary of your findings.