Fareast bank offers the following quotes for the EUR and USD currency pair, a spot exchange rate of EUR 2.6514/USD and a one-year forward rate at EUR 2.4867/USD. The interest rates are 7.12% p.a. in the Eurozone and 4.21% p.a. in the United States. A professional trader who can borrow USD 1,300,000 (or its EUR equivalent) has the ability to accurately predict the exchange rate in one year at EUR 2.2927/USD. How much arbitrage profit or loss can the trader make by engaging in a carry trade?

a.

USD 255,700.32

b.

EUR 155,663.40

c.

-USD 255,700.32

d.

-EUR 155,663.40

Urgent help needed. No lengthy workings needed.