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Bank Y quotes a bid rate for the Indian rupee (INR) of $0.0254 and an ask rate of $0.0257. Bank Z quotes a bid rate
Bank Y quotes a bid rate for the Indian rupee (INR) of $0.0254 and an ask rate of $0.0257. Bank Z quotes a bid rate for the Indian rupee of $0.0258 and an ask rate of $0.0259. You have just completed an international finance course and detect an opportunity for arbitrage in these quotes. Your rich uncle is willing to lend you $1,000 for one day if you repay him $1,002 tomorrow. If you accept your uncle's offer, the return from conducting arbitrage, after accounting for the cost of borrowing, is 0 -0.11% O 0.19% O 1.07% 0.28%
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