Assume the following information:

Quoted Price

Spot rate of Singapore dollar

$.75

90day forward rate of Singapore dollar

$.74

90day Singapore interest rate

4.5%

90day U.S. interest rate

2.5%

Given this information, what would be the yield (percentage return) to a U.S. investor who used covered interest arbitrage?(Assume the investor invests $1,000,000.)

What market forces would occur to eliminate any further possibilities of covered interest arbitrage?