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Part $1$

Covered interest arbitrage moves the market$\_\_\_\_\_\_\_\_$ equilibrium because$\_\_\_\_\_\_\_\_.$

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Part $1$

A$.$

$$toward; purchasing a currency on the spot market and selling in the forward market narrows the differential between the two

B$.$

away$$ from; demand for the stronger currency forces up interest rates on the weaker security

C$.$

away$$ from; purchasing a currency on the spot market and selling in the forward market increases the differential between the two

D$.$

$$toward; investors are now more willing to invest in risky securities