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What arbitrage opportunity is available

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Reference no: EM13727215

Suppose that Quincy college offers a risk-free interest rate of 2,5% on both saving and loans and stone hill bank offers a risk-interest of 3% on both saving and loans

a. what arbitrage opportunity is available?

b. which bank would experience a surge in the demand for loans? which banks would experience a surge in deposits?

c. what would you expect to happen to the interest rates of the two banks are offering?

Reference no: EM13727215

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