Suppose that the annual interest rate is 5.0% in the United States and 3.5% in Germany, and that the spot exchange rate is $1.12/, and the forward exchange rate, with one-year maturity, is $1.16/. Assume that an arbitrager can borrow up to $1,000,000 or 6892,857 (which is the equivalent of $1,000,000 at the spot exchange rate of $1.12/), show arbitrage profit from a German investor point of view. (1) Is there an arbitrage opportunity? Why? (2) If yes, what is the profit? (3) Assume that the inflation rate is 4% in United States and 3% in Germany, calculate the real exchange rate q. (4) Discuss how the competitiveness of Germany change relative to United states based on the real exchange rate q you calculated in the last