1. Assume the risk-free rate in the U.S. is 2% (annualized) and the risk-free rate in Mexico is 7.5% (annualized). If you borrow $100,000 at the U.S. risk-free rate, exchange into Mexican pesos at the spot rate and invest at the Mexican risk-free rate for 6 months, (a) What is your profit if the MXN/U SD rate in 6 months is the same as today's rate? (b) Show the steps for how you could try to make money from the situation where the 6 month forward MXN/U SD rate = the spot rate (c) What is the 6 month forward rate where there is no arbitrage