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Hampton Investment Co. is a U.S. firm that executes a carry trade in which it borrows Euros and invest ion British Pounds. Hampton uses $100,000
Hampton Investment Co. is a U.S. firm that executes a carry trade in which it borrows Euros and invest ion British Pounds. Hampton uses $100,000 of its own funds and borrows an additional euros. It will pay 0.5% on its euros borrowed for next month and will earn 1% on funds invested in British pounds. Assume that the euros spot rate is $1.20 and the British pound spot rate is $1.80. What is Hamptons expected profit from its carry trade
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