b) Consider the following information Spot rate =2 Euro /$ R US =10% Forward rate one period ahead =1.8 Euro /$ R E =5% Show through your workings, your arbitrage profit if you start with US $100. (5 marks) c) If, on an average, the yield curves were flat, what would this say about the liquidity premiums in the term structure? Would you be more or less willing to accept the pure expectations theory? (5 marks)