Answer the following questions with clear step.

Lucas Nielsen, a foreign exchange trader at JPMorgan Chase, is faced with the following market rates: Funds available $5 million Spot exchange rate (Dkr/$) 6.1720 US dollar 3-month interest rate 3% Danish kroner 3-month interest rate 5% a. What would an uncovered interest arbitrage (UIA) imply? State briefly. (2.5 points) b. What would be the loss/gain from the UIA if three months later the spot exchange rate between the Norwegian krone and the U.S. dollar is Dkr6.2550/$? (2.5 points) C. At what future spot exchange rate between the Danish kroner and the U.S. dollar three months from now will Lucas break even? (2.5 points) d. If the 3-month forward rate between the Danish kroner and the U.S. dollar is Dkr6.1980/$ can Lucas make an arbitrage profit? Why, or why not? Explain briefly. If he can, show the arbitrage strategy and calculate the size of the profit. (2.5 points)