The pound spot rate is $$\frac{1\mathrm{.}40}{}$ and the pound interest rate is $2\%.$ The dollar and U$.$K$.$ inflation rates are

both $0\%$ per annum. If a derivative $($ not a forward$)$ contract that pays $1$ in $1$ year is currently traded at

$$1\mathrm{.}40,$ can you make a riskless profit? $($Yes$/$No$)$ If so$,$ compute the profit $($a positive number$).$ If not,

compute the loss $($a negative number$)$ or enter $0.$ The profit or loss should be made in pounds in $1$ year.

All contracts are divisible and can be sold short. There is no restriction on borrowing or lending. Ignore

irrelevant information.

"Yes" or $"$No$"$

Profit$/$loss$/(?)$ pounds in $1$ year