Assuming (1) that you can buy a sterling call with strike price of $1.50 for 3 cents,

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Assuming (1) that you can buy a sterling call with strike price of $1.50 for 3 cents, (2) that you can sell a sterling put at the same strike price for 4 cents,

(3) that the prevailing forward rate is $1.54, and (4) that the annual risk free rate in the United States is 6 %, show how arbitragers can generate a riskless profit.

Explain how you would expect the different prices to adjust.

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