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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 is4percent per annum in the United States

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 is4percent per annum in the United States and10percent per annum in UK.Assume that you can borrow up to$1,000,000or800,000.Assume that you want to realize profit in terms of what will be your arbitrage profit(rounded to the nearest)?

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