You are researching interest rates and their forecasts. Your research provides you with the following: 1-year rate = 6% 2-year rate = 6.125% 3-year rate = 8.5% 1-year rate, 2 years from now = 6.5%...

You are researching interest rates and their forecasts. Your research provides you with the following:

1-year rate = 6%        2-year rate = 6.125%      3-year rate = 8.5%

1-year rate, 2 years from now = 6.5%

Assuming you can borrow $1 million, can you use this interest rate information to earn some risk-free profit. if yes, compute the profit. Show detailed workings. Assume that the pure expectations theory applies.