10. Suppose you know the following items: you can borrow and lend $500,000 at the oneyear interest rate in the United States at 7.5%; in country A both the borrowing and lending rates are 9.2%; the spot exchange rate between the U.S. dollar and country A's currency is now $0.1725 per unit of currency of country A; and the one-year forward exchange rate is $0.2 per unit of currency of country W. a. Explain how you could make a profit without risk and without investing any of your own money. (Assume commissions, fees, etc., to be equal to zero.) b. Aside from assuming commissions, fees, and so on, to be zero, several unrealistic assumptions must be made in answering part (a). What are they? c. Even if we incorporated realistic considerations regarding commissions and so on, the interest rate and exchange rate numbers in this question would probably produce a profit of some size. Why do you think opportunities like the one in this question are unlikely to come along often in the real world? 10. Suppose you know the following items: you can borrow and lend $500,000 at the oneyear interest rate in the United States at 7.5%; in country A both the borrowing and lending rates are 9.2%; the spot exchange rate between the U.S. dollar and country A's currency is now $0.1725 per unit of currency of country A; and the one-year forward exchange rate is $0.2 per unit of currency of country W. a. Explain how you could make a profit without risk and without investing any of your own money. (Assume commissions, fees, etc., to be equal to zero.) b. Aside from assuming commissions, fees, and so on, to be zero, several unrealistic assumptions must be made in answering part (a). What are they? c. Even if we incorporated realistic considerations regarding commissions and so on, the interest rate and exchange rate numbers in this question would probably produce a profit of some size. Why do you think opportunities like the one in this question are unlikely to come along often in the real world