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All quotes correctly algebraically Show all calculations The interest rate in the United States is 0.5% and 1.5% in the United Kingdom. The spot price

All quotes correctly algebraically

Show all calculations

The interest rate in the United States is 0.5% and 1.5% in the United Kingdom. The spot price is 0.90 GBP / USD. The one-year forward exchange rate is 1.0 USD / GBP.

a) Make an Arbitration.

b) What does the forward exchange rate have to be in order for there to be no possibility of a arbitrage?

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