Question: Question 1 [30 points! You are working on a currency arbitrage desk. You look up exchange rates and interest rates for the USD versus the

Question 1 [30 points! You are working on a currency arbitrage desk. You look up exchange rates and interest rates for the USD versus the Canadian Dollar (CAD) and find the following: The current spot rate is 0.810 USD/CAD. The 12-month forward exchange rate is 0.833 USD/CAD (note: Canadian dollar futures contracts are 100,000 CAD each). The 12-month T-bill yield in the USA is 1.31% (assume this is the continuously compounded annualized yield) and the 12-month risk-free rate in Canada is 1.45% (also continuously compounded and annualized). What is the arbitrage trade, and what is your prot per futures contract

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