Suppose the spot exchange rate between the United States and France is $1.28/. The continuously compounded interest rate in the U.S. is 5%, while the continuously compounded euro-denominated interest rate is 3%. Suppose you observe a 12-month forward exchange rate of $1.14/. What transactions could you undertake to make money with zero initial investment and no risk?

	a.	Borrow euros, convert to U.S. dollars, and invest in a U.S. dollar-denominated bill today. After 12 months, convert back to euros at $1.14/ and pay off the loan.
	b.	No arbitrage is possible under these conditions.
	c.	Borrow U.S. dollars, convert to euros, and invest in a euro-denominated bill today. After 12 months, convert back to U.S. dollars at $1.14/ and pay off the loan..
	d.	Borrow U.S. dollars and invest in a U.S. dollar-denominated bill today. After 12 months, pay off the loan and convert the excess funds to euros at $1.14/.
	e.	Borrow euros and invest in a euro-denominated bill today. After 12 months, pay off the loan and convert the excess funds to U.S. dollars at $1.14/.