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QUESTION 7 Use the following information to answer the next two questions. An investment banker in Spain notices that 1 year interest rates in Spain and Mexico are 12% and 8%, respectively. Current spot rates are as follows: 1.02/$, $.15/MP The one year forward rate is .18/MP. What should the forward premium be for lFlP to hold? ' .037 /'\ '~ -.0357 h ' .04 -.04 QUESTION 8 Assuming that the banker has access to one million euros, find his covered interest arbitrage profit (in euros). Flound intermediate steps to four decimals. C": 197,700 C": 201,600 C": 150,500 b 10