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Suppose that the nominal interest rate is 4% per year in China and 3% per year in the U.S. The real interest rates are 2%
Suppose that the nominal interest rate is 4% per year in China and 3% per year in the U.S. The real interest rates are 2% in two countries. There is a quick scheme to get rich. Borrow money from a U.S. bank at 3% and deposit it into a Chinese bank at 4%. What's wrong with this scheme?Please provide a technical analysis.
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