Further, you have strong reasons to believe that the 6-month spot rate in six months will be 9%.

Describe the transactions can you undertake to profit from your information? Assuming that you can take out a loan of 100$ to invest.

How much profit will you expect to make if you use your whole line of credit? (4)

Hint: Calculate the payoff from your investment and the payment on your loan at the end of the year, then take the different. (Round to 2 decimal places)