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The annual interest rates in the AUS and UK are 5 % and 8 % respectively. The current spot rate is $ 1 . 5

The annual interest rates in the AUS and UK are

5 %

and

8 %

respectively. The current spot rate is $

\frac{1.50}{}

and the

1

year forward rate is $

\frac{1.48}{} .

Can arbitrage profits be made from the above situation?

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