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The exchange rate today is 0.7 CAD/USD. The USD 1-year interest rate is 1%. The 1-year interest rate for CAD is 3%. The 1-year European

The exchange rate today is 0.7 CAD/USD.

The USD 1-year interest rate is 1%. The 1-year interest rate for CAD is 3%.

The 1-year European call and put options with a strike of 0.7 have equal prices.

Is there an arbitrage opportunity? If there is one, describe it; if not, explain why.

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