Questiоns 40-42 аre bаsed оn the fоllowing informаtion: Suppose you observe the following exchange rates: S($/€) = 1.25. The six-month forward rate is F6-m($/€) = 1.26. The annual risk-free interest rate in the U.S. is 5% and in Germany it is 2%. You can borrow either $1,000,000 or €800,000. Your total arbitrage profit will be $ [l1] (please leave whole dollars for your answer).
Questiоns 26-30 аre bаsed оn the fоllowing informаtion: Assume the current spot Euro is $1.30/€ and the six-month European put option has a striking price of $1.35/€. Assume the option premium is $0.03/€. If at the due date, the value of the Euro has risen to $1.37/€, will the option be exercised or not? The net profit/loss of the buyer of the option will be _______.