Question

Problem 6-15 (algorithmic) IE Question Help Statoils Arbitrage. Statoil, the national oil company of Norway, is a large, sophisticated and active participant in both the currency and petrochemical markets Although it is a Norwegian company, because operates within the global oil market, considers the U.S. doilar, rather than the Norwegian Krone, as its functional currency. All Karlsen is a currency trader for Statoil, and has immediate use of other $3 million for the Norwegian krone equivalent). He is faced with the following market rates and wonders whether he can make some arbitrage profits in the coming 90 days. $ Abitrage funds available Spot exchange rate (Nok/5) 3-month forward (N ) US dollar annual interest rate Norwegian Krone annual interest rate 3.000.000 6.0319 501 4.998 % i ng currency, the N agian krone.wing the door forward days, and The CIA profit potentials 3309 %, which tells Ari Karlsen he should borrow U.S. dollars and invest in the lower therefore eam covered interest arbitrage (CIA) profis. (Round to four decimal places and select from the drop-down menus) The CIA profit amount is $ (Round to the nearest cent)

Answer 1

in USD 30,00,000.00 37485.00 Conversion Rate 6.0319 i n NOK 1,80,95.700.00 1 Particulars 2 Borrowings 3 Interest expense on borrowings | 4 Interest earnings on lending 5 Net Payables induding Interest 6 Net Investment induding Interest 7 CIA Profit 8 CIA Profit Percentage 2,01,088.47 | 6.0186 182.96.788.47 30.37.485.00 30.40,040.62 2.555.62 0.340% in NOK B in USD 3000000 =ROUND(B2* 4.998%*(90/360),4) Conversion Rate 16.0319 =B2*C2 =ROUND(4-445%*D2*(90/360)4) | 1 Particulars | 2 Borrowings | 3 Interest expense on borrowings 4 Interest earnings on lending 5 Net Payables induding Interest 6 Net Investmentinduding Interest 17 CIA Profit 8 CIA Profit Percentage 16.0186 =D2+D4 =B2+B3 =ROUND (D6/C6,4) =B6-B5 =ROUND(B7/B2*4,6)