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2. The following economic data was also released yesterday: (annualized) US Japan | 1.9% 0.9% Nominal interest rates 1.75% 1.2% The YEN/USD spot is 109.9656.

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2. The following economic data was also released yesterday: (annualized) US Japan | 1.9% 0.9% Nominal interest rates 1.75% 1.2% The YEN/USD spot is 109.9656. If the 60-day forward rate (YEN/USD) is 109.9800, what, if any, arbitrage opportunity exists based on interest rate parity? (15 marks)

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