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The spot exchange rate is $1.10 per . One year ahead forward rate is $1.08 per . If the interest
rate in dollars is 4% and the interest rate in euros is 7%. If an investor borrows $100 and invests
in a euro denominated bond while locking the one year ahead conversion rate with a forward
contract. What is her profit from this strategy?
Group of answer choices
$1.05
$1.85
$0.82
$2.28

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