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Problem 5 The current spot rate is EUR/GBP 1.1600 and the six-month forward rate is EUR/ GBP 1.16300. The six-month interest rate in the UK
Problem 5 The current spot rate is EUR/GBP 1.1600 and the six-month forward rate is EUR/ GBP 1.16300. The six-month interest rate in the UK is 0.40% and the six-month interest rate in the Eurozone is 0.44%. What would the British interest rate have to be per annum so that there would be no arbitrage opportunity? (round up your answer to the 4th digit)
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