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Make sure to show work and give explanation 7. (5 pts.) Suppose you observe the following one-year interest rates, spot exchange rates and futures prices.

Make sure to show work and give explanation
7. (5 pts.) Suppose you observe the following one-year interest rates, spot exchange rates and futures prices. Futures contracts are available on 10,000. How much risk-free arbitrage profit could you make on one contract at maturity from this mispricing? Exchange Rate Interest Rate APR Sn(S/E) $1.45 = 1.00 is 4% F360($/) $1.48 = 1.00 If 3%

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