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Explain the Interest Rate Parity theorem and discuss its implications? Assume the interest rate is 13% in the UK and 8% in the US If

Explain the Interest Rate Parity theorem and discuss its implications?

Assume the interest rate is 13% in the UK and 8% in the US If the US dollar is selling at a one year forward premium of 5% against the pound is there an arbitrage opportunity? Explain.

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