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a) Business School Ltd. is an active participant in both the currency and ammonia markets....

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a) Business School Ltd. is an active participant in both the currency and ammonia markets. Although it is a Dutch company, its functional currency is GBP and not EUR. You are a trader in the company and wonder whether you can make some arbitrage profits in the next 180 days. If yes, show the procedure and calculate the annualised return from your strategy. Would you expect this to happen in real life? Variables Spot exchange rate ( per ) 6-month forward rate ( per ) GBP 6-month interest rate EUR 6-month interest rate Values 1.28 1.30 4.0% 4.3% (10 marks)

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