# How to benefit from different forward rates

This is an exam question that I cannot answer using my textbook so I came to this site for help:

Assume that I can buy a 2, 2 forward rate of 11% at the stock market, that is in two years I can deposit my money for two years at a 11% interest rate.

Assuming further that my local bank offered me to deposit my money in two years for two years at 12% interest rate, so basically the same thing but I cannot "trade" this offer to other people because it is a personal offer to me.

Assuming further that I can borrow and lend money at some interest rate, let's say 8% or something.

Question: Is there any way that an investor could gain from those different interest rates for the forward? Any answers are highly appreciated! Thanks a lot in advance.

• I just found one possibility: That would be to offer a 2,2 forward to the market at 11% and at the same time to take the banks offer of a 2,2 forward at 12%. That is, assuming that I can also offer forwards to the market and not only buy them. Also I assumed that the underlying sum of money is equal in both cases (market and bank) – Alon Aug 17 '19 at 17:57
• If the forward rate is 11%, that means you can also borrow in 2 years at 11%. Do that and deposit the money in the 12% account. – farnsy Aug 18 '19 at 15:50