1:40:52 Currently, the spot exchange rate is $1.65 per and the three-month forward exchange rate is $1.67 per . The three-month interest rate is 8.0% per annum in the U.S. and 5.8% per annum in the U.K. Assume that you can borrow as much as $1,650,000 or 1,000,000. Required: a. Determine whether the interest rate parity is currently holding. b. If the IRP is not holding, how would you carry out covered interest arbitrage? What will be your arbitrage profit? c. Explain how the IRP will be restored as a result of covered arbitrage activities. Complete this question by entering your answers in the tabs below. Required A Required B Required C Determine whether the interest rate parity is currently holding. Determine whether the interest rate parity is currently holding. Required B >

Currently, the spot exchange rate is $1.65 per and the three-month forward exchange rate is $1.67 per \&. The three-month interest. rate is 8.0% per annum in the US and 5.8% per annum in the UK. Assume that you can bortow as much as $1,650,000 or $1,000,000 Required: a. Determine whether the interest rate parity is currently holding b. If the IRP is not holding. how would you carry out covered interest arbitrage? What will be your arbitrage protit? c. Explain how the IRP will be restored as a result of covered arbitrage activites Complete this question by entering your answers in the tabs below. Determine whether the interest rate parity is currently holding. Dotermine whether the interest rate partiy ts curreney hodsing