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The spot exchange of us dollars in euros is 0.74 and the 6 month forward rate is 0.73. The 6 month continuously compouhded interest rate
The spot exchange of us dollars in euros is 0.74 and the 6 month forward rate is 0.73. The 6 month continuously compouhded interest rate for us dollar accounts is 5% per annum where as the 6 month continuosly compounded interest rate for euro accounts is 1.5%. Explain how a risk free arbitrage profit can be made
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