Suppose you observe that $90-$day interest rate across the eurozone is $4\%,$ while the interest rate in the U$.$S$.$ over the same time period is $1\%.$

Further, the spot rate and the $90-$day forward rate on the euro are both $$1\mathrm{.}25.$

You have $$800,000$ that you wish to use in order to engage in covered interest arbitrage.

After $90-$days in the bank, you withdraw your $665,600$ euros from the bank in the eurozone, and exchange them for dollars in order to fulfill the

forward contract, receiving $

$.$ This represents a profit of $

over your initial $$800,000.$

TOTAL SCORE: $\frac{1\mathrm{.}5}{5}$