Heidi Hi Jensen, a foreign exchange trader at JPMorgan Chase, can invest $5 million, or the foreigncurrency equivalent of the bank's short-term funds, in a covered interest arbitrage with Denmark. He has collected the following market data for the arbitrage strategy:

a) Do the market data indicate an opportunity for Heidi to conduct a covered interest arbitrage? Explain why. (3 marks)

b) How should Heidi do the covered interest arbitrage? (3 marks)

c)How much is Heidi's covered interest arbitrage profit? May use a diagram to show the specific stepsand the corresponding cash flows. (6 marks)