Question: Please explain and show all work How high does the lending rate in the euro zone have to be before an arbitrageur would NOT consider

Please explain and show all work

How high does the lending rate in the euro zone have to be before an arbitrageur would NOT consider borrowing dollars, trading for euro at the spot, investing in the euro zone and hedging with a short position in the forward contract? The bid-ask spreads are too wide for any profitable arbitrage when i_Element > 0 3.48% -2.09% None of the above

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