Question 1. You are a Canadian investor. You face the following prices: Spot (CAD/GBP) Canadian Interest Rate (p.a.) UK Interest Rate (p.a.) 2.01502 4% 2% a) Compute the 3-month forward rate for the Pound that is consistent with covered interest parity. b) Assume instead that the three months forward rate for the Pound is CAD 2.02002/GBP. Is there an arbitrage opportunity? If so, how much arbitrage profits can you make today (per CAD invested)? c) Assume that you face a 20 percent interest income tax for all investment in England, but only a 10 percent interest income tax for all investment in Canada. Compute the 3-month forward rate for the Pound that is consistent with covered interest parity