Suppose the following conditions exist between the U.S. and Canada. U.S. interest rate = 4.5%. Canadian interest rate = 3.4%. Spot rate: 1 CAD = .9537 USD. 6 month forward rate: 1 CAD = .9612 USD. Are the conditions of interest rate parity violated? If so, what would be our profit if we engaged in covered interest arbitrage with $2M?

	A.	Interest rate parity is not violated- no opportunity
	B.	Yes, interest rate parity is violated. We can make a profit of $4,995.60 with our $2M.
	C.	Yes, interest rate parity is violated. We can make a profit of $5,655.90 with our $2M.
	D.	Yes, interest rate parity is violated. We can make a profit of $2,887.32 with our $2M.