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Design a covered arbitrage strategy

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Covered Interest Arbitrage. Assume the following information:

St = 1.19 in EURUSD Ft,90 = 1.18 in EURUSD

iEUR = 1.50%

iUSD = 0.5%

T = 90 days

Given this information, is covered interest arbitrage possible?

Design a covered arbitrage strategy and calculate its profits.

Reference no: EM132673121

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