The exchange rate in 1 year is expected to be 0.097, Ee$/Peso = 0.097 as in (D), the current 1- yearinterest rate in Australia is 2%, and the 1-year forward rate is F$/Peso = 0.10. If you can borrow $1million from a bank in Australia or 10 million pesos from a bank in Mexico, explain how you canmake money without any exchange rate risks.
Arbitrage funds available
Spot rate (USD/CD)
180-day forward rate (USD/CD)
180-day Canadian dollar interest rate
180-day US dollar interest rate