assume the period ** one year: the borrowing cost ** 1,000,000*1.06=1,060,000 usd the spot rate ** 0.6440/50dm/usd,so the principal equals:1,000,000*0.6440=644,000 dm the holding benefit of dm for one year **:644,000*1.1=708,400 dm then convert it into usd equals:708,400*1.85=1,310,540 usd the arbitrage income ** 1,310,540-1,060,000=250,540 usd