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A currency dealer can borrow $980,000 (or the equivalent in euros) for one year. The one-year interest rate is 5.80% in the U.S. and 3.50%
A currency dealer can borrow $980,000 (or the equivalent in euros) for one year. The one-year interest rate is 5.80% in the U.S. and 3.50% in the euro zone. The spot exchange rate is $1.5199/1.00 and the one-year forward exchange rate is $1.5364/1.00. What arbitrage profit results if the trader borrows the maximum available funds? 30,203.60 OR $46,404.81 7,503.76 OR $11,528.78 11,528.78 OR $17,712.82 22,235.62 OR $34,162.81 22,540.00 OR $34,630.46 16,255.58 OR $24,975.07
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