Suppose that the current spot exchange rate is $1.25/€ and the 1-year forward exchange rate is...

Suppose that the current spot exchange rate is $1.25/€ and the 1-year forward exchange rate is $1.20/€. The 1-year interest rate is 2.00 percent per annum in the United States and 5.00 percent per annum in France. Assume that you can borrow up to $1,000,000 or €800,000. Calculate your arbitrage profit in €.

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jeff jeffy answered 1 year ago

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