To take advantage of a covered interest arbitrage opportunity, many investors are borrowing the Japanese yen to buy the euro and invest in a euro-denominated loan hedged with a forward contract. Which of the following is likely a result of the arbitrage activities? a O A decrease of the forward exchange rate F{X/) A decrease of the Japanese interest rate O A decrease of the spot exchange rate S/W/) O An increase of the euro interest rate According to the covered IRP, the currency with the higher interest rate in a currency pair should trade at a forward premium O depreciate against the other currency O appreciate against the other currency O trade at a forward discount Suppose you observe a spot exchange rate of $1.12/. If interest rates are 2% APR in the US and 1% APR in the eurozone, what should the no-arbitrage 6-month forward rate be? O $1.1090/E O $1.1256/ O $1.1145/ O $1.1311/