The current US $- Canadian dollar(C$) exchange rate is $0.75/C$.The yield on a one-year US Treasury security is 1%, and the yield on the one-year Canadian Treasury security is 1.5%.The one-year forward rate (F_$/C$) is $0.80/C$.Based on these quotes, does interest-rate parity hold?Show your work.

Based on your answer above, if interest rate parity doesnothold, how can you take advantage of the discrepancy to make a risk-free profit?Assume that you will borrow/invest the equivalent of US$1,000.(Be specific in your answer: state in which currency you will borrow and invest; the total cost of borrowing; the proceeds from your investment, and the net profits from your strategy.