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Assume you have the following information about the EURO and USD: The spot rate, S0=1.0304/1USD, The US$ interst rate is 5.84%, the interst rate is

Assume you have the following information about the EURO and USD:

The spot rate, S0=1.0304/1USD, The US$ interst rate is 5.84%, the interst rate is 3.59%, the time to expiration is 90/365 = 0.2466.

A) What is the forward rate between the EURO and USD?

B) If the observed forward rate is 0.9800/1USD, is there any arbitrage opportunity?

If yes, show the steps involved in this transaction.

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