Assume that a US firm can invest funds for one year in dollars at 4% or invest funds inkrone at 7%. The spot rate of the krone is $0.54 while the one year forward rate of the kroneis $0.54. If firms attempt to use covered interest arbitrage, what effect should this have interms of rates against the dollar? (a) spot rate of krone strengthens, forward rate of krone weakens (b) spot rate of krone weakens, forward rate of krone strengthens (c) spot rate of krone weakens, forward rate of krone weakens (d) spot rate of krone strengthens, forward rate of krone strengthens