need help solving with work shown

5. (15 points) For each of the following transactions, report the associated changes in the appropriate U.S. balance of payments account. a) A Canadian firm purchases $1 million of software from Microsoft. It pays with a cashier's check from BMO, a Canadian bank. b) A U.S. citizen sends $100 in cash to a friend in Denmark for their birthday. c) Morgan Stanley receives $20,000 of U.S. T-bills from a French bank in exchange for $15,000 of Google stock and $5,000 worth of consulting services. 6. (15 points) Provide 3 examples of goods market frictions that can prevent real exchange rates from converging. Explain how these frictions influence real exchange rates. 7. (20 points) Suppose that the US interest rate is 8% per year, and that the Japanese interest rate is 4% per year. Suppose further that the exchange rate is Ey/s = Y106/$ and the 6 month forward rate is Fv/s = Y103.5/$. a) Is covered interest parity (CIP) satisfied? b) If CIP is not satisfied, explain how you would perform covered interest arbitrage (CIA) to earn a profit. c) How much profit did you make performing CIA if you initially borrowed $1,000,000? (Hint: consider a 6-month time horizon and adjust the annual rates accordingly ie. divide by 2.)