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Given the following information Current spot rate is 0.625/$ 180-day forward rate is 0.620/$ 180-day interest rate on is 2% 180-day interest rate on $
Given the following information Current spot rate is 0.625/$ 180-day forward rate is 0.620/$ 180-day interest rate on is 2% 180-day interest rate on $ is 4% is the home currency A. Is there covered interest arbitrage opportunity? B. If you borrow 50,000 for 180 days to invest by applying covered interest arbitrage, what will your excess return be? Why?
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