Question V: Carry Trade I You manage the Kramerica Global Strategies II hedge fund, which executes foreign exchange ariitrage st.rategics. Yon observe that alori. :(nii lending rates in the US are 3% and in France are 5%. The current exchange rate is $1.03/, and the expected spot rate in one year is $1.10/e 1 9 a. Show that a carry trade is possible for the fund b. If the fund were to execute the trade, would it be profitable? c. What other broad strategies might a macro-hedge fund engage in? 1