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What is the net cash flow in one year

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Suppose that the annual interest rate is 3.4 percent in the United States and 4.2 percent in Germany, and that the EUR/USD spot exchange rate is 1.1039 and the forward exchange rate, with one-year maturity, is 1.1319. Assume that an arbitrager can borrow up to $1,000,000. If an astute trader finds an arbitrage, what is the net cash flow in one year?

Reference no: EM133057547

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