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Problem 1.25. Suppose that USD-sterling spot and forward exchange rates are as follows: S at I .5580 90-da orward 1.5556 ISO-da omard 1.5518 What opportunities

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Problem 1.25. Suppose that USD-sterling spot and forward exchange rates are as follows: S at I .5580 90-da orward 1.5556 ISO-da omard 1.5518 What opportunities are open to an arbitrageur in the following situations? (a) A ISO-day European call option to buy 1 for 3152 costs 2 cents. (b) A 90-day European put option to sell 1 for $1.59 costs 2 cents

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