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Consider the following interest rates, and spot and forward exchange rates. Can an investor earn an arbitrage profit? Borrowing Lending Bid Ask $ 5% 4.5%

Consider the following interest rates, and spot and forward exchange rates. Can an investor earn an arbitrage profit?

Borrowing

Lending

Bid

Ask

4.5%

Spot

$1.00 = 1.00

$1.01 = 1.00

5.5%

Forward

$0.99 = 1.00

$1.00 = 1.0

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