The one-year forward exchange rate is 120 what must the, Financial Management

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The one-year forward exchange rate is 120 what must the

A currency dealer has good credit and can borrow either $1,000,000 or €800,000 for one year. The one-year interest rate in the U.S. is i$= 2% and in the euro zone the one-year interest rate is i€= 5%. The one-year forward exchange rate is $1.20/€; what must the spot rate be to eliminate arbitrage opportunities?

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