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14 1 point 1.) The current spot rate is BRL5.75/5. The 2-year Brazil interest rate is 6%, while the US 2-year interest rate is 4%.

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14 1 point 1.) The current spot rate is BRL5.75/5. The 2-year Brazil interest rate is 6%, while the US 2-year interest rate is 4%. O There is a Covered Interest Arbitrage opportunity for a risk-free profit. The BRL is expected to strengthen over the next two years. The BRL probably trades at a forward premium. The dollar probably trades at a forward premium. Previous

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