Use &+ and Ft to represent the nominal spot and forward exchange rates (both expressed as dollar cost of euros), i and i* to represent the nominal U.S. and European interest rates. a. Suppose that the European interest rate is i* = 0.05, the spot exchange rate is & = $1.05, and the forward rate is Ft = $1.07. How many dollars would an investor have at t+1 if they bought $1 million of European bonds in period t? = b. Suppose the U.S. interest rate is i 0.05. Either explain how it is possible to arbitrage this situation to make a riskless profit, or explain why that is not possible.