The annual risk-free interest rate is 8% in the U.S. and 6% in Italy. Italy uses the euro, which trades at a 2% premium in the one-year forward market.

Who can profit from covered interest arbitrage, and how?

a European investors can profit by buying dollars in the forward market.

b No one can profit from covered interest arbitrage.

c U.S. investors can profit by selling euros in the forward market.

d U.S. investors can profit by buying euros in the forward market.

e European investors can profit by selling dollars in the forward market.