Assume interest rates in the US are at $4\mathrm{.}8\%$ per year, and interest rates in Israel are at $3\mathrm{.}25\%$ per

year, and that the shekel is trading at $3\mathrm{.}76$ sheckels$/$dollar $($on the spot market, i$.$e$.$ for exchange

today$).$

a$.$ If the two$-$year forward rate on sheckels is $3\mathrm{.}63$ sheckels$/$dollar$,$ do you want to invest in

dollars or sheckels to maximize your returns for the next two years?

b$.$ How much would you make in arbitrage profits if you can borrow $$10,000,000$ or an

equivalent amount of sheckels over this time period?

c$.$ What sheckel$/$dollar forward rate implies no arbitrage?