Question 2. You are an American investor. You face the following prices: Spot (USD/EUR) 1.09380 1.09400 3-m Forward (USD/EUR) 1.09385 1.09415 Interest rate USD (p.a.) 1.00% 3.00% Interest rate EU (p.a.) 2.00% 4.00% These prices account for the presence of transaction costs in both foreign exchange markets (bid and ask rates) and money markets (borrowing and lending rates). a) Is there an arbitrage opportunity in these quotes? b) If you had to borrow USD 100, where would you borrow? Why? c) If you had to invest USD 100, where would you invest? Why? d) Assume that you require EUR 5000 in three months, what is the smallest amount of USD that you need to put aside today? e) Your great aunt promises to give you EUR 5000 in three months. What is the maximum amount of USD that you can get today