Assume zero transactions costs and direct exchange rate quotation, use the following information to answers: Spot rate of the Mexican peso = C$0.44 1-year Canadian interest rate - 5% 1-year Mexican interest rate = 16% 1-year forward rate of the Mexican peso = $0.38 a) Determine whether interest rate parity (IRP) exists. (4 marks) b) According to IRP, is the quoted forward rate too high or too low ( 4 marks) c) Explain if covered interest arbitrage is feasible for any investor ( 4 marks) d) Based on you answer for part c. compute the profit for the investor who uses two hundred thousand units of his home currency to conduct covered interest arbitrage, (4 marks) What is the yield/return to the investor based on your answer to part d. (4 marks) B