What arbitrage strategy has positive profits

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Reference no: EM131520348

If the interest rates tor deposits or loans are flat at 5% (any length of time), what should be the forward rate on a forward loan for $100 (to be received in one year, and paid back in two)? If the Forward rate is 4%, what arbitrage strategy has positive profits? Make sure you are state exactly what happens in each period.

Reference no: EM131520348

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