1. Althea the arbitrageur wants to make a riskless profit by attempting covered interest arbitrage. She has $1,000,000 and sees the following spot and forward rate quotes offered:

Spot = $1.40/Euro Forward180 day = $1.42/Euro

Alana can earn 5% interest per annum on a 1-year US government bond and 3% interest per annum on the equivalent French bond. Assuming Alana can sell either bond after six months for the same price she paid, excluding trading costs does Alana have an arbitrage opportunity and if so, approximately how much profit can she make?