b$.$ Assume that annual interest rates are $4\mathrm{.}5$ percent in the United States and $3$ percent in Turkey.

An FI can borrow $($by issuing CDs$)$ or invest $($by purchasing CDs$)$ at these rates. The spot rate

is $$0\mathrm{.}3510/1$ Turkish lira $($TL$).$

i$.$ If the forward rate is $$\frac{0\mathrm{.}3520}{T}L,$ how could the bank arbitrage using a sum of $$3$ million? What

is the spread earned?

ii$.$ Instead of borrowing and investing at the same rate, there is now a difference between

borrowing and investing rate, which shows in the table below.

U$.$S$.$ borrowing rate $5\mathrm{.}0\%$

U$.$S$.$ investing rate $4\mathrm{.}0\%$

Turkey borrowing rate $3\mathrm{.}5\%$

Turkey investing rate $2\mathrm{.}5\%$

Is there still any arbitrage profit?