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7. Compare the one-year forward premium or discount on the French franc to the one-year Eurodollar and Eurofranc interest rates shown in Exhibit 2. How

7. Compare the one-year forward premium or discount on the French franc to the one-year Eurodollar and Eurofranc interest rates shown in Exhibit 2. How can this situation be arbitraged?

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Exhibit 2 Cross-Spot Exchange Ratesa DM FF Yen DM .3050/51 1.3169/71 FF 3.2779/88 4.3365/84 Yen 75.9232/350 23.1595/618 Exhibit 2 Cross-Spot Exchange Ratesa DM FF Yen DM .3050/51 1.3169/71 FF 3.2779/88 4.3365/84 Yen 75.9232/350 23.1595/618

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