Questions 40-42 are based on the following information: Suppose you observe the following exchange rates: S($/) = 1.25. The six-month forward rate is F6-m($/) = 1.26. The annual risk-free interest rate in the U.S. is 5% and in Germany it is 2%. You can borrow either $1,000,000 or 800,000. Which of the following strategy you will make a profit? borrow USD and lend in Germany borrow Euro and lend in US Questions 40-42 are based on the following information: Suppose you observe the following exchange rates: S($/) = 1.25. The six-month forward rate is F6-m($/) = 1.26. The annual risk-free interest rate in the U.S. is 5% and in Germany it is 2%. You can borrow either $1,000,000 or 800,000. Which of the following strategy you will make a profit? borrow USD and lend in Germany borrow Euro and lend in US