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In a recent e - news, you observe that the 6 - month forward rate is $ 1 . 5 0 3 1 / Euro.
In a recent enews, you observe that the month forward rate is $ Euro. Further, if you invest the dollar, it fetches you interest at the rate of pa In comparison, the interest rate in Eurozone is pa You also see that CAD are needed to purchase a Euro and CAD are needed to buy a US$ Is it possible for you to make an arbitrage profit? If so which of the arbitrage strategies will you employ and what will be the profit? Assume that interest rate parity holds, and you have one million dollars available to conduct arbitrage.
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