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An investment banker in Spain notices that 1 year interest rates in Spain and Mexico are 12% and 8%, respectively. Current spot rates are as follows: €1.02/$, $.15/MP The one year forward rate is €.18/MP and the expected spot rate one year from now is €.14/MP.

Assuming that the banker has access to one million euros, find his covered interest arbitrage profit (in euros). Round intermediate steps to four decimals.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92775426

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