Problem 5 Suppose Bank A loans and deposits to its customers with the annual interest rate 5%, compounded annually. Suppose further that there exists another bank, Bank B loans and deposits with continuous compounding rate r = 0.05 to its customers. (Note that 0.05 1.0513). Descibe an arbitrage strategy (by borrowing and lending between banks) so that you make money-out-of-nowhere by the end of year one. Win