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Determining the investment in tanzania

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Suppose the interest rate on Euro is 7% in Germany, and the interest rate on a comparable Tshs investment in Tanzania is 9%. The spot rate is TZS 750 and the one-year forward rate is TZS 770. Assume further that there are no costs or taxes exist.

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Do covered arbitrage profits exist in the above situation? If yes, briefly describe you will go about to benefit from it. If not, explain why?

Reference no: EM132596404

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