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20. Covered Interest Arbitrage on a 6-month horizon (10 points) US interest rate -12% Euro...

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20. Covered Interest Arbitrage on a 6-month horizon (10 points) US interest rate -12% Euro zone interest rate = 2% The current spot rate is $1.37 The forward rate is $1.4/ Once the arbitrageurs around the globe execute their strategy, the following would happen US interest Rate _ (increase or Decrease) The forward rate (increase or Decrease)

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