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A European investor observes that the spot price for the US dollar is currently 1.2555 /$. A 9-month futures contract on the US dollar is
A European investor observes that the spot price for the US dollar is currently 1.2555 /$. A 9-month futures contract on the US dollar is quoted as 1.2924 /$. If the American and European 9-month interest rates are 7.5% and 4.5% p.a. respectively, determine if there is an arbitrage opportunity and if any, describe a strategy to take advantage of it
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