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4.12 Quotes for the U.S. dollar and Thai baht (Bt) are as follows: Spot contract midpoint Ispio 1-year forward contract midpoint So Bt/$ = Bt24.96/$

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4.12 Quotes for the U.S. dollar and Thai baht (Bt) are as follows: Spot contract midpoint Ispio 1-year forward contract midpoint So Bt/$ = Bt24.96/$ F, Bt/$ = Bt25.64/$ 1-year Eurodollar interest rate on i$ = 6.125% per year Ad ornag & a. Your newspaper does not quote 1-year Eurocurrency interest rates on Thai baht. Make your own estimate of iBt b. Suppose that you can trade at So Bt/$, F, Bt/$, and i$ and that you also can either borrow or lend at a Thai Eurocurrency interest rate of iBt = 10 percent per year. Based on a $1 million initial amount, how much profit can you generate through covered interest arbitrage

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