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Arbitrage and Law of One Price Q Suppose Bank One offers a risk-free interest rate of 10.0% on both savings and loans, and Bank Enn

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Arbitrage and Law of One Price Q Suppose Bank One offers a risk-free interest rate of 10.0% on both savings and loans, and Bank Enn offers a risk-free interest rate of 10.5% on both savings and loans. a) What arbitrage opportunity is available? b) Which bank would experience a surge in the demand for loans? Which bank Everyone would borrow from Bank Une, save at Bank tnn c) What would vou expect to happen to the interest rates the two banks are

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