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Suppose a 1-year UK T-bill pays 3.31% and a 1-year Canadian T-bill pays 1.8%. The current spot exchange rate is 1 British pound (GBP) =

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Suppose a 1-year UK T-bill pays 3.31% and a 1-year Canadian T-bill pays 1.8%. The current spot exchange rate is 1 British pound (GBP) = 1.7203 Canadian dollar (CAD) and the 1-year forward exchange rate is 1 GBP = 1.6736 CAD. What arbitrage profit can an investor eam on an investment value of CAD 1 million? Answer: CAD (DO NOT ROUND YOUR CALCULATIONS UNTIL YOU REACH THE FINAL ANSWER. ENTER YOUR RESPONSE ROUNDED TO TWO DECIMAL PLACES AND NO SEPARATOR FOR THOUSANDS)

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