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 the following information:

The 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$: 1.47 $/BP

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

A) About $40,542

B) None of the above

C) About $48,382

D) About $24,254