6-month interest rate in Mexico is 6% and U.S. exhibits a 6-month rate of 5%.

A.) If the IRP holds, what would be the forward rate premium? If currently the spot rate of Mexican peso is $0.1, what is the 6-month forward rate?

B.)Let say the actual forward discount in the market is 0.97%, does interest rate parity hold?

C.) At the market forward discount of 0.97%, is covered interest arbitrage possible to a U.S. investor? Explain market forces on spot rate and forward rate to eliminate further possibilities of covered interest arbitrage.