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An interational investor has a choice between a risk-free one year Americal security with an annual return of six percent and a comparable British security
An interational investor has a choice between a risk-free one year Americal security with an annual return of six percent and a comparable British security with an annual return of eight percent. If the spot rate is $1.508 and the one year forward rate is $1.40/, and there are no transactions costs, then what should the investor do to generate a risk less arbitrage (if any). Also calculate the profit? 7:54 pm
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