Suppose that the current spot exchange rate is 1.6/ and the one-year forward exchange rate is 1.75/. The one-year interest rate is 4.2% in Euros and 3.8% in Pounds. You can borrow at most 2,000,000 or the equivalent Pound amount, i.e., 1,250,000, at the current spot exchange rate. The student is required to: 2- Calculate how you can realise a guaranteed profit from covered interest arbitrage. Assume that you are a Euro-based investor. Also determine the size of the arbitrage profit. 3- Suppose you are a Pound-based investor. Calculate the covered arbitrage process and determine the Pound profit amount.