Part o) Describe, in your own words, what arbitrage is. Describe interest rate party and purchasing power party. How is the arbitrage concept used in explaining these party relationships Parlb) Suppose that a CFO has some cash to invest for six months at an amount of $8,000. The interest rate is 9% for one year in the U.S. and 10% per year in Spain. Currently, the spot exchange rate is 1.22/$ and the six-month forward exchange rate is 1.42/$. The CFO does not want any exchange risk. Where should he or she invest to maximize the return? Which parily relationship did you use to solve this question? Does your answer support the party relationship Show your calculations and explain (Hint: you have two alternatives to compare: also note that the investment is for 6 months) Part o) Describe, in your own words, what arbitrage is. Describe interest rate party and purchasing power party. How is the arbitrage concept used in explaining these party relationships Parlb) Suppose that a CFO has some cash to invest for six months at an amount of $8,000. The interest rate is 9% for one year in the U.S. and 10% per year in Spain. Currently, the spot exchange rate is 1.22/$ and the six-month forward exchange rate is 1.42/$. The CFO does not want any exchange risk. Where should he or she invest to maximize the return? Which parily relationship did you use to solve this question? Does your answer support the party relationship Show your calculations and explain (Hint: you have two alternatives to compare: also note that the investment is for 6 months)