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Which of the following statements best represents the Arbitrage Rule of Thumb? o 1) If the difference in interest rate is greater than forward

 

Which of the following statements best represents the Arbitrage Rule of Thumb? o 1) If the difference in interest rate is greater than forward premium, then invest in the lower interest currency 2) If the difference in interest rate is less than forward premium, then invest in the lower interest currency 3) If the difference in interest rate is less than forward premium, then invest in the higher interest currency 4) Covered interest arbitrage opportunities continue to hold even if the interest rate parity is established

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