Hi, this is part of an investment proposal that I created. Can you please help me solve for the explanation for what investing the $750,000 in surplus funds for both scenarios, which are riskless and risky in Norway as mentioned, also using the mentioned interest rates would look like using the below equations. Norways current exchange rate is 1 Norweigian Krone for every $0.089.

Riskless Arbitrage (Interest Rate Arbitrage and Covered Interest Rate Parity):

1. Interest Rate Arbitrage Equation: Profit=P(1+nrforeign??)nt?P(1+nrdomestic??)nt

This formula calculates the profit from interest rate arbitrage by considering the compounding of interest in both the foreign and domestic markets. The difference in interest rates determines the riskless return.

1. Covered Interest Rate Parity Equation: Profit=P(SF??1)

This equation calculates the profit from covered interest rate parity by considering the difference between the forward and spot exchange rates. It reflects the potential profit from exploiting exchange rate differentials.

Risky Arbitrage (Equity Arbitrage in European stock markets):

Profit=P(1+r)t

I am writing to present an investment strategy for the surplus funds of $750,000 held by our company, W with the objective to maximize the return on investment while managing risk effectively. To achieve this, we will explore both riskless and risky arbitrage opportunities in foreign countries, supported by the company's own research consultant's investment theories. I. Capital Deployment Strategy: Riskless Arbitrage: In summary, riskless arbitrage involves exploiting short-lived, guaranteed profit opportunities resulting from price, interest rate, or exchange rate discrepancies in various financial markets. It is a key strategy for capitalizing on market inefficiencies while essentially avoiding any market risk. In this regard, we would consider the following: A. Interest Rate Arbitrage: 3. Identify and deploy the $750,000 of capital into foreign countries with higher interest rates (5% or higher) than the domestic market. Australia, Norway, and Sweden are examples. 4. Invest in high-yileld interest-bearing instruments such as government bonds in the foreign currency to earn a riskless return. Continuously monitor exchange rates, such as EUR/USD, as fluctuations may impact overall returns and arbitrage profitability. B. Covered Interest Rate Parity: 3. Evaluate the forward exchange rate contracts for the Euro (EUR) currency. 4. Utilize the interest rate differential to engage in covered interest rate parity. Risky Arbitrage: Risky arbitrage, on the other hand, involves capitalizing on price or market inefficiencies in financial markets to generate a profit, and inherently carries higher risk but can yield potentially higher returns. Here, we would considerthe following: A. Equity Arbitrage: 4. Identify undervalued or growth opportunities in foreign stock markets, particularly in Europe. 5. Allocate funds to invest in a diversified portfolio of European stocks with an expected return of 10%. 6. Diversify across sectors and regions in Europe to control risk by monitoring the portfolio, using financial analysis to spot arbitrage chances, and being aware of potential impacts from exchange rate fluctuations, like EUR/USD, on overall returns. B. Foreign Exchange Market Arbitrage: 4. Continuously monitor exchange rates, including EUR/USD, to detect mispricing and opportunities. 5. Employ triangular arbitrage to exploit currency value inconsistencies in foreign exchange. 5. Execute rapid and high-frequency trading strategies in the foreign exchange market for efficient arbitrage