what is covered interest differential

14) Suppose that Britain and U.S. interest rates are iUK=0.04 and iUS=0.03 respectively for 90 days, and that the spot exchange rates are $2.00/ while the forward rates are $1.96/. A New York arbitrageur begins with $20 million. Answer the following questions: Alls there any opportunity for the arbitrage? B)What happens if many people take advantage of an opportunity for interest arbitrage