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Assume that U.S. firms can invest for one year in the United States at 10 percent or in the U.K. at 12 percent. The spot rate of the pound is $1.10 while the one-year forward rate of the pound is $1.10. If U.S. firms attempt to use covered interest arbitrage, what forces should occur? (1) Spot rate of pound decreases. (2) Spot rate of pound increases. (3) Forward rate of pound increases. (4) Forward rate of pound decreases. Select the relevant forces: a. 1 and 3. b. 4 only. c. 1 only. d. 2 and 4