Equinor's Corporate Arbitrage. Equinor, the national oil company of Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is aNorwegian company, because it operates within the global oil market, it considers the US dollar, rather than the Norwegian krone (Nok), as its functional currency. Ari Karisen is a currency trader forEquinor and has immediate use of either $3.1 million (or the Norwegian krone equivalent). He is faced with the following market rates, and wonders whether he can make some arbitrage profitsin the coming 90 days.The CIA profit potential is%, which tells Ari Karlsen he should borrowand invest in theyielding currency, the90 days, and therefore earn covered interest arbitrage (CIA) profits (Round to four decimal places and select from the drop-down menus)The CIA profit amount is $(Round to the nearest cent.)Data table(Click on the following icon in order to copy its contents into a spreadsheet)Arbitrage funds available$3,100,000603156.0182Spot exchange rate (Nok-$1.00)3-month forward rate (Nok=$1.00)US dollar 3-month interest rateNorwegian krone 3-month interest rate4.997%4.455%Xselling the dollars forward

In order to gain advantage on the currency arbitrage, you have to borrow at a lower rate of interest…

Equinor's Corporate Arbitrage. Equinor, 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 it operates within the global oil market, it considers the US dollar, rather than the Norwegian krone (Nok), as its functional currency. Ari Karlsen is a currency trader Equinor and has immediate use of either $3.1 million (or the Norwegian krone equivalent). He is faced with the following market rates, and wonders whether he can make some arbitrage prof in the coming 90 days. The CIA profit potential is%, which tells Ari Karlsen he should borrow and invest in the yielding currency, the 90 days, and therefore eam covered interest arbitrage (CIA) profits. (Round to four decimal places and select from the drop-down menus) The CIA profit amount is $(Round to the nearest cent) Data table (Click on the following icon in order to copy its contents into a spreadsheet) Arbitrage funds available Spot exchange rate (Nok-$1.00) 3-month forward rate (Nok-$1.00) US dollar 3-month interest rate Norwegian krone 3-month interest rate $3,100,000 60315 60182 4.997% 4.455% X selling the dollars forward

Equinor's Corporate Arbitrage. Equinor, 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 it operates within the global oil market, it considers the US dollar, rather than the Norwegian krone (Nok), as its functional currency. Ari Karlsen is a currency trader Equinor and has immediate use of either $3.1 million (or the Norwegian krone equivalent). He is faced with the following market rates, and wonders whether he can make some arbitrage prof in the coming 90 days. The CIA profit potential is%, which tells Ari Karlsen he should borrow and invest in the yielding currency, the 90 days, and therefore eam covered interest arbitrage (CIA) profits. (Round to four decimal places and select from the drop-down menus) The CIA profit amount is $(Round to the nearest cent) Data table (Click on the following icon in order to copy its contents into a spreadsheet) Arbitrage funds available Spot exchange rate (Nok-$1.00) 3-month forward rate (Nok-$1.00) US dollar 3-month interest rate Norwegian krone 3-month interest rate $3,100,000 60315 60182 4.997% 4.455% X selling the dollars forward

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Equinor's Corporate Arbitrage. Equinor, 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 it operates within the global oil market, it considers the U.S. dollar, rather than the Norwegian krone (Nok), as its functional currency. Ari Karlsen is a currency trader for Equinor and has immediate use of either $3 million (or 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 = $1.00) 3-month forward rate (Nok = $1.00) U.S. dollar annual interest rate Norwegian krone annual interest rate S 3,000,000 6.0312 6.0186 5.000% 4.450 % SIE The CIA profit potential is %, which tells Ari Karlsen he should borrow and invest in the covered interest arbitrage (CIA) profits. (Round to four decimal places and select from the…
Statoil, the national company in Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates within the global oil market, it considers the U.S. dollar($), rather than the Norwegian krone(Nok), as its functional currency.Ari Karlsen is a currency trading strategist for Statoil. Answer the following question: 1A) Statoil sold 1 million barrels of crude oil to the Norwegian petrol station chain,Circle K,todayfor 120 Nok per barrel (Nok denotes the Norwegian Krone). Statoil expects to receive the full payments from Circle K in 3 months’ time when the crude oil is delivered to Circle K’s facilities in Norway. Statoil is informed that Circle K will pay for the oil in Norwegian Krone. Ari is asked by the Chief Financial Officer (CFO) about the strategy to reduce the uncertainty around the expected payment from Circle K. Ariis faced with the following market rates: Spot exchange…
Statoil, the national company in Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates within the global oil market, it considers the U.S. dollar($), rather than the Norwegian krone(Nok), as its functional currency.Ari Karlsen is a currency trading strategist for Statoil. Answer the following question: 1A) Statoil sold 1 million barrels of crude oil to the Norwegian petrol station chain,Circle K,todayfor 120 Nok per barrel (Nok denotes the Norwegian Krone). Statoil expects to receive the full payments from Circle K in 3 months’ time when the crude oil is delivered to Circle K’s facilities in Norway. Statoil is informed that Circle K will pay for the oil in Norwegian Krone. Ari is asked by the Chief Financial Officer (CFO) about the strategy to reduce the uncertainty around the expected payment from Circle K. Ariis faced with the following market rates: Spot exchange…
Statoil, the national company in Norway, and is an active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates within the global oil market, it considers the U.S. dollar ($), rather than the Norwegian krone (Nok), as its functional currency. Ari Karlsen is a currency trading strategist for Statoil. Answer the following two independent questions a) and b): Statoil sold 1 million barrels of crude oil to the Norwegian petrol station chain, Circle K, today for 120 Nok per barrel (Nok denotes the Norwegian Krone). Statoil expects to receive the full payments from Circle K in 3 months’ time when the crude oil is delivered to Circle K’s facilities in Norway. Statoil is informed that Circle K will pay for the oil in Norwegian Krone. Ari is asked by the Chief Financial Officer (CFO) about the strategy to reduce the uncertainty around the expected payment from Circle K. Ari is faced with the following market rates: Spot…
Statoil, the national company in Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates within the global oil market, it considers the U.S. dollar ($), rather than the Norwegian krone (Nek), as its functional currency. Ari Karlsenis a currency trading strategist for Statoil. Answer the following two independent questions a) and b): 1. Statoil, the national company in Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates within the global oil market, it considers the U.S. dollar ($), rather than the Norwegian krone (Ngk), as its functional currency. Ari Karlsen is a currency trading strategist for Statoil. Answer the following two independent questions a) and b): Spot exchange Rate 3-month forward rate U.S. dollar 3-month interest rate Norwegian Krone 3-month interest rate…
Statoil, the national company in Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates within the global oil market, it considers the U.S. dollar ($), rather than the Norwegian krone (Nok), as its functional currency. Ari Karlsen is a currency trading strategist for Statoil. Answer the following two independent questions a) and b): Statoil sold 1 million barrels of crude oil to the Norwegian petrol station chain, Circle K, today for 120 Nok per barrel (Nok denotes the Norwegian Krone). Statoil expects to receive the full payments from Circle K in 3 months’ time when the crude oil is delivered to Circle K’s facilities in Norway. Statoil is informed that Circle K will pay for the oil in Norwegian Krone. Ari is asked by the Chief Financial Officer (CFO) about the strategy to reduce the uncertainty around the expected payment from Circle K. Ari is faced with the following market…
Statoil, the national company in Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates withinthe global oil market, it considers the U.S. dollar ($), rather than the Norwegian krone (Nok), as its functional currency. Ari Karlsen is a currency trading strategist for Statoil. Answer the following two independent questions a) and b):a) Statoil sold 1 million barrels of crude oil to the Norwegian petrol station chain, Circle K, today for 120 Nok per barrel (Nok denotes the Norwegian Krone). Statoil expects to receive the full payments from Circle K in 3 months’ time when the crude oil is delivered to Circle K’s facilities in Norway. Statoil is informed that Circle K will pay for the oil in Norwegian Krone. Ari is asked by the Chief Financial Officer (CFO) about the strategy to reduce the uncertainty around the expected payment from Circle K. Ari is faced with the following market…
Statoil, the national company in Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates within the global oil market, it considers the U.S. dollar ($), rather than the Norwegian krone (Nok), as its functional currency. Ari Karlsen is a currency trading strategist for Statoil. Answer the following two independent questions a) and b): a) Statoil sold 1 million barrels of crude oil to the Norwegianpetrol station chain, Circle K, today for 120 Nok per barrel (Nok denotes the Norwegian Krone). Statoil expects to receive the full payments from Circle K in 3 months’ time when the crude oil is delivered to Circle K’s facilities in Norway. Statoil is informed that Circle K will pay for the oil in Norwegian Krone. Ari is asked by the Chief Financial Officer (CFO) about the strategy to reduce the uncertainty around the expected payment from Circle K. Ari is faced with the following market…
Statoil, the national company in Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates within the global oil market, it considers the U.S. dollar ($), rather than the Norwegian krone (Nok), as its functional currency. Ari Karlsen is a currency trading strategist for Statoil. Answer the following two independent questions a) and b): a) Statoil sold 1 million barrels of crude oil to the Norwegianpetrol station chain, Circle K, today for 120 Nok per barrel (Nok denotes the Norwegian Krone). Statoil expects to receive the full payments from Circle K in 3 months’ timewhen the crude oil is delivered to Circle K’s facilities in Norway. Statoil is informed that Circle K will pay for the oil in Norwegian Krone. Ari is asked by the Chief Financial Officer (CFO) about the strategy to reduce the uncertainty around the expected payment from Circle K. Ari is faced with the following market…
I want the answer for question b) ( I have attached the image of the question as well ) Statoil, the national company in Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates within the global oil market, it considers the U.S. dollar ($), rather than the Norwegian krone (Nok), as its functional currency. Ari Karlsen is a currency trading strategist for Statoil. Answer the following two independent questions a) and b): a) Statoil sold 1 million barrels of crude oil to the Norwegianpetrol station chain, Circle K, today for 120 Nok per barrel (Nok denotes the Norwegian Krone). Statoil expects to receive the full payments from Circle K in 3 months’ time when the crude oil is delivered to Circle K’s facilities in Norway. Statoil is informed that Circle K will pay for the oil in Norwegian Krone. Ari is asked by the Chief Financial Officer (CFO) about the strategy to reduce the…
Statoil, the national company in Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates within the global oil market, it considers the U.S. dollar($), rather than the Norwegian krone(Nok), as its functional currency.Ari Karlsen is a currency trading strategist for Statoil. Answer the following question: In a daily meeting, the Chief Financial Officer (CFO) gave Ari the following table of market rate Spot exchange rate: Yen 106/$ U.S. dollar interest rateper annum 10% Japanese Yen interest rateper annum 6% and told Ari that the company’s financial analyst expected the Japanese Yen to depreciate against the U.S. dollar by 3.46%in 90 days.Assume there are 360 days in a year, and all interest rates are simple interest rates.If the financial analyst’s prediction about the US dollar and Japanese Yen turned out to be true: Required for part B 1) What would the…
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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