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Given the following information, show how you can arbitrage and compute your profit, if you can...

Given the following information, show how you can arbitrage and compute your profit, if you can borrow 200 million dollars or euros equivalent for three months. Show your profit in both dollars and euros.

Spot rate ($/€) 1.255

3-month forward rate ($/€) 1.213

3-month U.S. dollar interest rate 2.0%

3-month euro interest rate 1.6%

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Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago
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