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(8 points) An arbitrageur facing the following prices wonders how to make money. Borrowing Lending Bid Ask CA 5% 4.50% Spot $1.00=(1.00 $1.01=E1.00 6% 5.50%

(8 points) An arbitrageur facing the following prices wonders how to make money. Borrowing Lending Bid Ask CA 5% 4.50% Spot $1.00=(1.00 $1.01=E1.00 6% 5.50% Forward $0.99=E1.00 $1.00=E1.00

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