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Suppose the U.S interest rate for the next six month is 1.5 percent (annual compounding). The foreign interest rate is 2 percent (annual compounding). The

Suppose the U.S interest rate for the next six month is 1.5 percent (annual compounding). The foreign interest rate is 2 percent (annual compounding). The spot price of the foreign currency in dollars is $1,665. The forward price is $1,664. Determine the correct forward price and recommend an arbitrage strategy.

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