Supposc that the current spot exchange rate is 1.50/ and the one-year forward exchange rate is 1.60/. The one-year interest rate is 5.4% in euros and 5.2% in pounds. You can boITow at most 1,000,000 or the equivalent pound anount, i.e., 666,667, at the current spot excharige (a) rate. Required Show how you can realize a guaranteed profit from covered interest arbitrage. Assume (i) you are a euro-based investor. Also determine the size of the arbitrage profit. that (10 marks) Discuss how the interest rate parity may be restored because of the above transactions. (ii) (10 marks)