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Suppose that the current spot exchange rate is $1.25/ and the three-month forward exchange rate is $1.20/. The three-month interest rate is 4 percent per

Suppose that the current spot exchange rate is $1.25/ and the three-month forward exchange rate is $1.20/. The three-month interest rate is 4 percent per annum in the United States and 10 percent per annum in UK. Assume that you can borrow up to $1,000,000 or 800,000. Assume that you want to realize profit in terms of what will be your arbitrage profit (rounded to the nearest )?

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