Assume you notice the following information. Assume you spend $1 million USD do an arbitrage trading strategy. What is your profit is USD. Remember to consider the profit after you pay back your loan

• Spot (CAD/USD)=1.75
• 1 Year Forward (CAD/USD) = 1.65
• 1 Year Canadian interest rate of 3% in Canadian Dollars (CAD)
• 1 Year US interest rate of 4% in US Dollars (USD

The Canadian dollar:US dollar exchange rate was C$1.15/US$1. One year later, it moved to C$1.25/US$1. The Canadian dollar:

depreciated by 15%

depreciated by 8%

appreciated by 10%

appreciated by 8.7%