Let's suppose you have $1 million to invest.

You are considering to invest in UK first, then convert the British Pound back to US$ in the future.

You know following information:

Annual Interest rate on investment in US: 2%

Annual Interest rate on investment in UK: 4%

Investment period: 1 year

Current exchange rate: 1.48 $/BP

Forward exchange rate which you can apply when converting BP to US$: 1.45 $/BP

What would be profit if you apply the covered-interest arbitrage?

Group of answer choices

About $4,054

None of the above

About $2,425

About $4,838

About $4,176