Assume the following information. You have $1,000,000 to invest.
Current sport rate of pound = $1.60
90-day forward rate of pound = $1.57
3-month deposit rate in U.S. = 3%
3-month deposit rate in U.K. = 4%
If you use covered interest arbitrage for a 90-day investment, what will be the amount of U.S. dollars you will have after 90 days?
a. $1,020,500. b. $1,045,600 c. $1,073,330 d. $1,094,230 e. $1,116,250