Use the following information to answer the next two questions.

An investment banker in Spain notices that 1 year interest rates in Spain and Mexico are 8% and 12%, respectively. Current spot rates are as follows:

1.02/$, $.15/MP

The one year forward rate is.18/MP and the expected spot rate one year from now is.14/MP.

What should the forward premium be for IRP to hold?

A) .037

B) -.0357

C) .04

D) -.04

Assuming that the banker has access to one million euros, find her covered interest arbitrage profit (in euros). Round intermediate steps to four decimals.

A) 0

B) 38,600

C) 197,700

D) 237,700