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Assume that you have the following information: Spot Rate: Six-month Forward Exchange Rate: One-Year CAD Interest Rate: One-Year EUR Interest Rate: CAD: Canadian Dollar EUR:

Assume that you have the following information: Spot Rate: Six-month Forward Exchange Rate: One-Year CAD Interest Rate: One-Year EUR Interest Rate: CAD: Canadian Dollar EUR: Euro 1.56 CAD/1 EUR 1.61 CAD/1 EUR 0.30 % annually -0.42% annually Is covered interest arbitrage worthwhile? If so, calculate the profits after six-months, assuming that you have 3,500 CAD. What else might you do to maximize profits if the covered interest arbitrage is worthwhile (explain in words)

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