"Suppose the annual interest rate is 5.0 percent in the United States and 3.5 percent in Germany, and the spot exchange rate is $1.12/euro and the forward exchange rate, with one-year maturity, is $1.2/euro. Assume that an arbitrager can borrow up to $1,000,000. If an astute trader finds an arbitrage, what is the net cash flow in one year? "

		"$39,907 "
		"$45,103 "
		"$58,929 "
		No arbitrage profit is possible because the forward rate is the equlibrium rate.