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The interest rate provided in Japan and France is respectively 1.25% per annum and 6.5% per annum. Current spot exchange rate: 116.7344/ and the one-year
The interest rate provided in Japan and France is respectively 1.25% per annum and 6.5% per annum. Current spot exchange rate: 116.7344/ and the one-year forward exchange rate is quoted as: 112.3024/. Assuming that the arbitrager can borrow 500,000,000 or its equivalent amount. What would be the profit/loss from this transaction? (20 marks)
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