Currently, the spot exchange rate is C$1,5055/ and twelve-month forward exchange rate is C1.4822/. The interest fate is 3% per annum in Canada and 4% per annum in Germany. Assume that you can borrow as much as C\$1,505,500 or 1,000,000 (Which is equivalent of C\$1,505,500 at the spot rate of C $1.5055/6 ). Please round the rates/ratio to the 4 th decimal places and also round up to the nearest dollar amount in your calculation. (a) Is there a covered interest arbitrage opportunity? Why? Please show your calculation. (b) if, how would you carry out covered interest arbitrage and earn risk-free profit from a German investor's perspective? Show all the steps and determine the arbitrage profit in . (c) Assume that the inflation rate in Canada is now 6.5% and that in Germany is 7%, calculate the real exchange rate q. (d) Discuss how the competitiveness of Germany change relative to Canada based on the real exchange rate q you calculated in the last