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2. Data: S(EUR/USD) = EUR/USD 1.14 Annual interest rate in Euro zone = 0.5% Annual interest rate in US = 2% Bank A offers: F(EUR/USD)

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2. Data: S(EUR/USD) = EUR/USD 1.14 Annual interest rate in Euro zone = 0.5% Annual interest rate in US = 2% Bank A offers: F(EUR/USD) = EUR/USD 1.2.4 Check for the presence of an arbitrage opportunity (Covered interest arbitrage). If you find an arbitrage, set up a strategy and compute the profits from your strategy. Show computations and compute profit in EUR

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