Depreciated by 17% Question 31 You observe the following quotes for $/. Exchange Rates One Year Interest Rates S $1.18/ is 2.6% pa F360 $1.25/ ie 1.6% p.a. What steps would you take to make an arbitrage profit? Borrow dollars, buy euro in the spot market, invest euro, sell euro in the forward market. Borrow euros, buy dollars in the spot market, invest dollars, sell dollars in the forward market. Borrow euro, sell euro in the spot market, invest dollars, buy dollars in the forward market Borrow dollars, sell euro in the spot market, invest euro, buy dollars in the forward market Question 32 You observe the following quotes for $/. Exchange Rates One Year Interest Rates S $1.18/ is 2.6% p.a. F1.25/ le 1.6% p.a. Assuming you can borrow $1,000,000 or 1,000,000, what is your arbitrage profit? (Interest rates compounded annually! 66.896 $50,271 $66.896 50.271 Question 33