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PROBLEM 4 (10 POINTS) Assume that you have the following information: 106 Yen/$ Six-month Forward Exchange 107.5 Yen/$ Rate One-Year Yen Interest Rate 4% annuall

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PROBLEM 4 (10 POINTS) Assume that you have the following information: 106 Yen/$ Six-month Forward Exchange 107.5 Yen/$ Rate One-Year Yen Interest Rate 4% annuall OneYear $ Interest Rate 8% annuall Is covered interest arbitrage worthwhile? If so, calculate the prots after six months

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