Question: Please can someone help to solve this problem urgently 2. (15 points) A foreign exchange trader, authorized to trade $1,000,000 or its equivalent (i.e. 714,286),

Please can someone help to solve this problem urgently 2. (15

Please can someone help to solve this problem urgently

2. (15 points) A foreign exchange trader, authorized to trade $1,000,000 or its equivalent (i.e. 714,286), faces the following quotes: Spot rate: Six-month forward: $1.4000/ $1.4200/ Six-month U.S. interest rate: 4.000% p.a. (2.000% per six-month) Six-month U.K. interest rate: 6.000% p.a. (3.000% per six-month) Show how this trader can profit from the covered interest arbitrage (CIA) opportunity and calculate the profits (draw a rectangular diagram showing the activities and directions of the transaction)

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