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The spot exchange rate $10/fc. The foreign interest rate is 8% and the US interest rate is 2%. If the futures price the foreighn currency

The spot exchange rate $10/fc. The foreign interest rate is 8% and the US interest rate is 2%. If the futures price the foreighn currency is $$9.65, is there an arbitrage opportunity? If yes, would you go long or short in futures on the foreign currency?

Multiple Choice

A. There is no arbitrage

B. Yes, long

C. Yes, short

D. Yes, but I will take no position in futures.

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