You, a foreign exchange trader for Black Valley Capital, are exploring covered interest arbitrage opportunities between Euros () and US Dollar ($) for the next three months. Suppose that the current spot exchange rate is 0.90/$ and the three-month forward exchange rate is 0.88/$. The three-month interest rate is 6.6 percent per annum in the United States and 6.40 percent per annum in France. Assume that you can borrow up to $1,000,000 or 900,000.

i. Determine whether the interest rate parity is currently holding.

ii. Show how to realize a certain profit via covered interest arbitrage, if you want to realize profit in terms of U.S. dollars. Also determine the size of your arbitrage profit.

iii. What is the three-month forward exchange rate for the covered interest arbitrage to be infeasible?