Currently, the spot exchange rate is $1.50/ and the one-year forward exchange rate is $1.60/. The one- year interest rate is 3.0% in the U.S. and 2.0% in the U.K. Assume that you can borrow as much as $1,500,000 or 1,000,000. ~ a. Determine whether the interest rate parity is currently holding. (4 points) b. If the IRP is not holding, how would you carry out covered interest arbitrage? Show all the steps and determine the arbitrage profit, in USD. (8 points) c. Assume you decide to implement a carry trade. If the spot rate, a year from today, ends up being ST($1.45/), what are your profits or losses? (5 points)