Interest rates 2% lower in the U.S. than in the foreign country. The foreign currency exhibits a 3% forward discount. Who has a covered interest arbitrage opportunity?
-Foreign investors investing in the U.S.
-Foreign investors investing in their own country
-U.S. investors investing in the U.S.
-No one, since the forward discount exceeds the interest rate differential
-U.S. investors investing in the foreign country