Dollar profits from interest arbitrage based on these data

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Reference no: EM131561748

One year U.S. interest rates are 10%, and European interest rates are 5%. The spot euro direct exchange rate quote is 1.30 and the 1-year forward rate direct quote is 1.2. If you can borrow either $1 million or euro 1 million to start with, what would be your dollar profits from interest arbitrage based on these data?

Reference no: EM131561748

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