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Short-term rates are 2% p.a. in Japan and 4% p.a. in the United States. The current exchange rate is 120 yen per dollar. If you
Short-term rates are 2% p.a. in Japan and 4% p.a. in the United States. The current exchange rate is 120 yen per dollar. If you can enter into a 1-year forward exchange rate of 115 yen per dollar, how can you arbitrage the situation?
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