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You have $10,000 to invest. The spot rate for the euro is $1.02 per euro, while the 180-day forward rate is $1.03 per euro. The
You have $10,000 to invest. The spot rate for the euro is $1.02 per euro, while the 180-day forward rate is $1.03 per euro. The six-monthly interest rate in the euro area is 8% and in the U.S. it is 3%.
what is your risk-free rate of return from explotiing the higher interest rate in the euro area?
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