Suppose that the US interest rate is 8% per year, and that the Japanese interest rate is 4% per year. Suppose further that the exchange rate is EY/$ = Y106/$ and the 6 month forward rate is FY/$ = Y103.5/$. a) Is covered interest parity (CIP) satisfied? b) If CIP is not satisfied, explain how you would perform covered interest arbitrage (CIA) to earn a profit. c) How much profit did you make performing CIA if you initially borrowed $1,000,000? (Hint: consider a 6-month time horizon and adjust the annual rates accordingly ie. divide by 2.)