You have equal amounts of money invested in a risk-free dollar-denominated investment and borrowed at the rate paid on the British pound.If you can earn a return during this,you have shown:

Question

Quizplus · Accepted Answer

If you can invest $1 in a risk-free dollar-denominated investment while simultaneously borrowing $1 at the rate paid on British pounds, you have zero net investment. If you earn a return, you have an arbitrage opportunity.

You Have Equal Amounts of Money Invested in a Risk-Free