The annual dollar return on dollars invested in Germany is (1.07 x 1.49)/1.46 - 1 = 9.20%. This return exceeds the 9% return on dollars invested in the United States by 0.25% per annum. Hence arbitrage profits can be earned by borrowing dollars or selling dollar assets, buying euros in the spot market, investing the euros at 7%, and simultaneously selling the euro interest and principal forward for one year for dollars.