The finance manager has now been tasked with investing AUD 5 million (or US dollar equivalent) for a period of three (3) months. Facing the rates shown in the table below, should the finance manager enter into a covered interest arbitrage (CIA) investment? If yes, show all relevant calculations to support your answer and show which currency the finance manager should invest in. If no, provide an explanation in no more than 4-5 sentences as to the reason why the finance manager should not enter into a covered interest arbitrage (CIA) investment.

Spot exchange rate	S (USD/AUD)	=	1.036/AUD
180-day forward rate	F180 (USD/AUD)	=	1.020/AUD
AUD discount rate	iAUD	=	6.00% p.a.
US dollar Discount rate	iUSD	=	4.00% p.a.

In your answer, you should:

i) Demonstrate that a CIA profit is possible due to the relationship between the spot rate and the forward rate; and

ii ) calculate the resulting CIA profit using any relevant calculations. If you wish, you can also use a diagram to show your answer.