A foreign exchange trader, authorised to trade $30,000, faces the following quotes and interest rates: One-year U.S. interest rate 7.81% p.a. One-year U.K. interest rate 4.3% p.a. Spot rate: GBP/USD 1.5000 One-year forward rate: GBP/USD 1.5625

What should the trader do to conduct covered interest arbitrage?

a.

Borrow at 7.81% in the U.S. and invest at 4.3% in the U.K.

b.

Borrow at 4.3% in the U.K. and invest at 7.81% in the U.S.

c.

Borrow at 7.81% in the U.S. and at 4.3% in the U.K.

d.

Invest at 7.81% in the U.S. and at 4.3% in the U.K.

e.

c and d