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Assume the following information: Quoted Price Spot rate of Chinese yuan $ 0 . 1 9 8 1 9 0 day forward rate of Chinese

Assume the following information:
Quoted Price
Spot rate of Chinese yuan
$0.1981
90 day forward rate of Chinese yuan
$0.2052
Chinese yuan deposit rate
2.5%
US dollar deposit rate
3.5%
Given this information, what would be the profit/loss to an investor in the U.S. who used covered interest arbitrage? (Assume the investor invests $1 million.)
b) What market forces would occur to eliminate any further possibilities of covered interest arbitrage?

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