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The interest rate is 3% on the dollar and 6% on the pound stereling. Also, the current spot rate is $1.6=1 pound and the 1-year
The interest rate is 3% on the dollar and 6% on the pound stereling. Also, the current spot rate is $1.6=1 pound and the 1-year forward rate is 1.0=1 pound. Is there an opportunity for covered interested arbitrage?
If yes, what is the arbitrage profit in terms of a percentange?
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