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Illustrate the steps of how you can realize a guaranteed profit from covered interest arbitrage. Compute the size of the arbitrage profit. 6 (20 points).

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Illustrate the steps of how you can realize a guaranteed profit from covered interest arbitrage. Compute the size of the arbitrage profit. 6 (20 points). Explain the process of how the arbitrage activities render the international financial market back to the IRP relationship

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