Question: (Problem 5) Suppose that the current spot exchange rate is 0.80/$ and the three-month forward exchange rate is 0.7813/$. The three-month interest rate is 5.60

(Problem 5) Suppose that the current spot exchange rate is 0.80/$ and the three-month forward exchange rate is 0.7813/$. The three-month interest rate is 5.60 percent per annum in the United States and 5.40 percent per annum in France. Assume that you can borrow up to $1,000,000 or 800,000. A. Assuming that you want to realize profit in terms of U.S. dollars, enter dollar amount of your arbitrage profit 20,000. A positive number means profit. A negative number means loss) B. Assuming that you want to realize profit in terms of euros, enter euro amount of your arbitrage profit A positive number means profit. A negative number means loss) (Round to zero decimal, e.g., (Round to zero decimal, e.g., 20,000
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