The one$-$year interest rate in a European and a Mexican bank is $1\%$ and $12\%$ respectively.

The spot exchange rate is EMX$$=18\mathrm{.}67$ while the one$-$year forward exchange rate offered

by the European bank is F$$MX$ $=0\mathrm{.}05.$

i$.$ Is there an opportunity for arbitrage? Calculate the interest forward exchange rate that

eliminates it$.$

ii$.$ What steps would someone take to make an arbitrage profit, and how would he profit if he must

borrow $1,000$ from a European bank?