The spot rate today for the number of Danish Krona (DKK) per Swiss Franc is 7.60 DKK = 1 SFR. The annualized Danish LIBOR interest-rate (for the six month period starting today) is 7%.
The annualized Swiss LIBOR interest-rate (for the six month period) starting today) is 3%. Assume six months is exactly .5 year.
What is the six month forward rate for the Danish Krona (DKK) per Swiss Franc (SFR) to four decimal places?
Suppose the theory that the Forward rate is an unbiased predictor of the future spot rate holds. What is the unbiased prediction of the spot exchange rate DKK per SFR in six months to four decimal places.
If the spot exchange rate (DKK per SFR) in six months were to be 7.40, would there be an arbitrage?
