Assume the following prices: Note: $1.40 = 1.00 is the same as 1.40$/ 1- Determine whether covered interest arbitrage is feasible for 180 days.

2. If a trader can borrow for 180 days either 1,000,000 or $1,000,000, explain the specific steps this trader must take to make a covered interest arbitrage and calculate the profit.

3. To offset the existing arbitrage opportunity, in what directions do spot and forward rate move? (Increase or decrease) explain.