Forward exchange rate

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Suppose that the annual interest rate is 5.0 percent in the United States and 3.5 percent in Germany, and that the spot exchange rate is $1.12/€ and the forward exchange rate, with one-year maturity, is $1.16/€. Assume that an arbitrager can borrow up to $1,000,000. If an astute trader =nds an arbitrage, what is the net cash >ow in one year? 21,964.29 please show work

Reference no: EM131401628

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