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the interest rates in the UK and the United States are, respectively, 4% and 6% per annum compounded continously. The spot price of the UK

the interest rates in the UK and the United States are, respectively, 4% and 6% per annum compounded continously. The spot price of the UK pound is $1.9. The forward price for a UK pound deliverable in 6 months is $2.0. a. Determine if an arbitrage opportunity exists. b. if there is such an opportunity, describe it in detail, showing the rish-free profit.

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