Use the following information to answer the next two questions.

The US dollar/Canadian dollar spot exchange rate is $.85/C$. The one year U.S. interest rate is 8% and the one year interest rate in Canada is 10%. What is the one-year forward rate that should prevail according to IRP? (Assume the US is the home country androundintermediate steps to four decimals.)

$.1685/C$

$.1318/C$

$.8657/C$

$.8345/C$

Suppose that the one year forward rate is$.82/C$.Find the profit (in terms of percentage returns) you could earn via covered interest arbitrage.Round intermediate steps to four decimals