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Business, 14.04.2020 20:06 haha396

Suppose that the one-year interest rate is 5.0 percent in the United States and 3.5 percent in Germany, and that the spot exchange rate is $1.12/€ and the one-year forward exchange rate, is $1.16/€. Assume that an arbitrageur can borrow up to $1,000,000. Multiple Choice This is an example where interest rate parity holds. This is an example of an arbitrage opportunity; interest rate parity does not hold. This is an example of a Purchasing Power Parity violation and an arbitrage opportunity. none of the options

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