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Suppose that DBS is offering unsecured loan at EIR 5% and UOB is offering at EIR 7.5%. EIR is effective interest rate, i.e. continuous compounding
Suppose that DBS is offering unsecured loan at EIR 5% and UOB is offering at EIR 7.5%. EIR is effective interest rate, i.e. continuous compounding interest rate. Assume that both banks also offer capital protected investment bond at 7% for DBS and 7.5% for UOB. Is the arbitrage possible?
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