1. The spot exchange rate and the three-month forward exchange rate of the euro vis--vis the US dollar are quoted in New York as follows:

S₀ = $1.1077/ with a spread 075 - 079

F_0,90 = $1.1022/ with a spread 020 - 024

The interest rate at which the trader can borrow or lend in the US is 2.75% per annum and that in Euroland is 3.25% per annum now, and they are expected to remain unchanged in the next three months.

Required:

1. Calculate and compare the forward premium and interest rate differential to verify that arbitrage opportunities may or may not exist in this case.
2. What should be the US interest rate if CIRP holds while other figures remain unchanged?