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Let's suppose you have $1 million to invest. You are considering to invest in UK...

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Accounting

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Let's suppose you have $1 million to invest. You are considering to invest in UK first, then convert the British Pound back to US\$ in the future. You know the following information: The annual Interest rate on investment in UK: 4% Investment period: 1 year Current exchange rate: 1.52$/BP Forward exchange rate which you can apply when converting BP to US\$:1.50 \$/BP What will be profit or loss if you apply the covered-interest arbitrage? Profit, about $36,838 Profit, about $29,218 Profit, about $28,424 Profit, about \$16,645 None of the above

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