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Given the information: Interest rate in US (Rh): Interest rate in Canada (Rh): Line of credit in US Line of credit in Canada The spot

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Given the information: Interest rate in US (Rh): Interest rate in Canada (Rh): Line of credit in US Line of credit in Canada The spot rate for CAD (SO): 1-year forward rate for CAD (FR): 7% 5% USD 10,000,000 CAD 12,500,000 $0.80 $0.82 Based on your recommended investment strategy your covered interest arbitrage profit should be: CAD 250,000 USD 62.500

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