The spot exchange rate is $$1\mathrm{.}50/.$ The three$-$month forward exchange rate is $$1\mathrm{.}52/.$ The $3-$month interest rate is $8\mathrm{.}0\%$ per annum in the U$.$S$.$ and $5\mathrm{.}8\%$ per annum in the U$.$K$.$ Investors can borrow either $$1,500,000$ or the equivalent $$ amount at the current spot rate.

$1.$ Describe the covered interest arbitrage $($CIA$)$ by a dollar$-$based investor if such opportunity

exists. Calculate th$(3)$ Describe the covered interest arbitrage $($CIA$)$ by a pound$-$based investor if such opportunity

exists. Calculate the investor$$s CIA profit if any.e investor$$s CIA profit if any.

$2.$ Describe the covered interest arbitrage $($CIA$)$ by a pound$-$based investor if such opportunity

exists. Calculate the investor$$s CIA profit if any.

$3.$ Based on the given information, specify how CIA activities help restore the market equilibrium

described by interest rate parity $($IRP$).$