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A friend of yours tells you that in Japan a specific Japanese treasury note matures for $1000 in two years can be bought or sold
- A friend of yours tells you that in Japan a specific Japanese treasury note matures for $1000 in two years can be bought or sold for $925. What is the annualized risk-free rate in this example? You happen to notice the same security can be purchased or sold domestically for $945,
how do you arbitrage this position?
How many times should you make this trade?
How likely is it that your friends information is current and correct?
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