1. Suppose you observe the following 1-year interest rates, spot exchange rates and futures prices. Futures contracts are available on 10,000. How much risk-free arbitrage profit could you make on 1 contract at maturity from this mispricing?
Current Spot rate ($/Euro) =1.4500
Current One year Forward Rate ($/Euro) =1.4800
U.S. Interest Rate=4%
Euro Interest Rate=3%