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Interest rate in the U.S. dollar is 4.5% and in the UK is 3.5% (both per annum w...
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Interest rate in the U.S. dollar is 4.5% and in the UK is 3.5% (both per annum with annual compounding). The dollar per GPB spot rate is $0.750/GBP. What is the arbitrage profit (to nearest thousand) on a required 1 million GBP payment if the forward rate is $0.800 per GBP and the exchange occurs in one year?
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