ael is a portfolio manager for an asset management company base Ireland. He is considering B. Mich in two alternative investmentso EUR10,000,000: six-month euro deposits or six-month UK pound ( deposits. He has decided not to bear any foreign exchange risk invests in UK pound deposits. h UK if he The following information is available today: six-month UK pound interest rate, 4% pa, six-month euro interest rate, 5% pa, spot rate EUR1.1960/E, six-month forward rate, EUR1.2080/E. Assume a 360-day year. Which of these two deposits provides the higher euro return in six months? i. If these were actually market prices, what would you expect to happen? ii. ii. What should be the six-month forward rate above to ensure there is no covered interest arbitrage