Suppose that the current spot exchange rate is $1.25/ and the three-month forward exchange rate is $1.20/. The three- month interest rate is 4 percent per annum in the United States and 10 percent per annum in UK. Assume that you can borrow up to $1,000,000 or 800,000. Assume that you want to realize profit in terms of what will be your arbitrage profit (rounded to the nearest )? QUESTION 2 Assume today's settlement price on a CME EUR futures contract is $1.10/EUR. You have a short position in one contract. Your performance bond account currently has a balance of $1,500. The next three days' settlement prices are $1.0974, $1.0985, and $1.0840. Calculate the balance of the performance bond account after the third day (Note: EUR125,000 is the contract size of EUR contract)