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2. (Ch. 7) Covered Interest Arbitrage. Assume the following market quotes information: Si=1.16 in EURUSD F1180 - 1.15 in EURUSD EUR 1.0% USD 0.5% T-180

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2. (Ch. 7) Covered Interest Arbitrage. Assume the following market quotes information: Si=1.16 in EURUSD F1180 - 1.15 in EURUSD EUR 1.0% USD 0.5% T-180 days Given this market quotes information, is covered interest arbitrage possible? (6 points) Design a covered arbitrage strategy and calculate its profits. (12 points)

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