Using the information
provided, show if it is possible or not to realize Money Market Arbitrage using
both theories: PPP and IFE. Determine where to ask for a loan and where to
invest. Determine the profit in the indicated currency.
Spot 35.23 LBP/PHP
Market ER (1 year) 36.88
LBP/PHP
Interest Lebanon 15% /
year
Interest Philippines 4%
/ year
Inflation Lebanon 14% /
year
Inflation Philippines 3%
/ year
Loan 778 units
Profit in PHP
NOTE: You MUST round the
answer to the nearest WHOLE number (NO DECIMAL PLACES ALLOWED). For example if
the answer is greater than or equal to 1.500 = 2. If the answer is less than or
equal to 1.49999 = 1. NO UNITS ALLOWED.
