Explain the concept of interest rate parity. Provide the rationale for its possible existence. Assume that the existing U.S. oneyear interest rate is 10 percent and the Canadian oneyear interest rate is 11 percent. Also assume that interest rate parity exists. Should the forward rate of the Canadian dollar exhibit a discount or a premium? If U.S. investors attempt covered interest arbitrage, what will be their return? If Canadian investors attempt covered interest arbitrage, what will be their return?