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You have been given the following information: Spot rate for Currency A to Currency B: 1:0.50 1 Year Forward Rate for Currency A to Currency

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You have been given the following information: Spot rate for Currency A to Currency B: 1:0.50 1 Year Forward Rate for Currency A to Currency B: 1:0.50 Interest Rate Currency A: 7% interest Rate Currency B: 4% Explain how you would arbitrage profits. Outline the steps to complete this arbitrage transaction. How much would you make in one year? (Assume you want to borrow and invest 100,000) Explain what the forward rate would have to be in order for no arbitrage profits to be made

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