Question: 3. Please use the following information for this question. S($/) F360($/) Exchange Rate $1.60/ $1.58/ Interest Rate is i Annual % 2% 4% (a)

3. Please use the following information for this question. S($/) F360($/) Exchange Rate $1.60/ $1.58/ Interest Rate is i Annual % 2% 4% (a) (1 point) If you borrow 1,000,000 for one year, how much money will you owe at maturity? (b) (1 point) If you borrow $1,000,000 for one year, how much money will you owe at maturity? (c) (1 point) If you have $1,000,000 and trade it for euro at the spot rate S($/), how many will you receive? (d) (1 point) If you have 1,000,000 and trade it for USD at the spot rate S($/), how many USD will you get? (e) (4 points) Suppose you are a US-based investor who cares about profits measured in US$. If you decide to borrow in euros, you can borrow 1,000,000 for one year; if you decide to borrow in USD, you can borrow $1,000,000 for one year. What is the profit you can earn via covered interest arbitrage?

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