Question: Problem 1 : Identifying Arbitrage A U . S . investor is considering arbitrage opportunities between the U . S . and the Eurozone. The

Problem 1: Identifying Arbitrage A U.S. investor is considering arbitrage opportunities between the U.S. and the Eurozone. The spot exchange rate is 1.15 EUR/USD, and the one-year forward rate is 1.12 EUR/USD. The U.S. one-year interest rate is \(3\%\), while the Eurozone one-year interest rate is \(1\%\). Assume investor has \(\$ 500,000\). Is there a covered interest arbitrage opportunity?
Problem 1 : Identifying Arbitrage A U . S .

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