The practice of investing in a currency that offers the higher return on a c known as covered interest arbitrage. Assume that the Eurodollar rate is 8 ? and that the Euroyen rate is 5% per annum. If the spot rate is 106/$ and the 180 days forward rate is 102.5/$, The interest rate difference is Forward premium is % There is covered interest arbitrage opportunity, since the interest rate difference the forward premium. In order to enjoy covered interest arbitrage opportunity correct strategy is to: You should borrow and invest in The arbitrage amount you can enjoy if you can borrow upto 1 million US dollars or its equivalent yens is USD. Please answer all parts of the