5. Draw a figure like Figure 6.4 to show what interest arbitrage will do to interest-rate differentials
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5. Draw a figure like Figure 6.4 to show what interest arbitrage will do to interest-rate differentials and the forward premiums at points A to F in the table below. If all the adjustment to the interest parity occurs in the forward exchange rate, what will F1—
12
($/£) be after interest parity has been restored?
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