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.

$(1)$ A US$.$ MNC would like to invest its extra cash reserve of $$1,500,000$ for $3$ months. How should

the extra cash reserve be invested? Explain with calculations.

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

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

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

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

$(4)$ Based on the given information, specify how CIA activities help restore the market equilibrium

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