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Here are some prices in the international money markets: Spot rate Forward rate (one year) Interest rate ($) Interest rate () = $0.0094/ = $0.0097/

Here are some prices in the international money markets: Spot rate Forward rate (one year) Interest rate ($) Interest rate () = $0.0094/ = $0.0097/ = 4% per year = 2% per year Assuming no transaction costs or taxes exist, determine whether covered interest arbitrage opportunities exist. Where would you invest? Where would you borrow?

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