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Spot exchange rate CAD1.2051/US$ 1 Year forward exchange rate CAD1.1922/US$ 1 Year US$ Interest rate 1.25% per year 1 Year CAD interest rate 3.75% per

Spot exchange rate CAD1.2051/US$

1 Year forward exchange rate CAD1.1922/US$

1 Year US$ Interest rate 1.25% per year

1 Year CAD interest rate 3.75% per year

Is the interest rate parity holding? You may ignore transaction costs

Is there an arbitrage opportunity? if yes, show what steps need to be taken to make arbitrage profit. Assuming that Anne Mkhize is authorized to work with S$ 1000,000, compute the arbitrage profit in dollars.

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