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Assume that 6-month forward rate = $1.10/; the current spot rate = $1.05/; 6-month interest rate in $ = 4%; and 6-month interest rate in

Assume that 6-month forward rate = $1.10/; the current spot rate = $1.05/; 6-month interest rate in $ = 4%; and 6-month interest rate in euro = 2%. Find the covered interest arbitrage profit. Start with borrowing $1,000,000.

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