There Can Be an Opportunity for Covered Interest Arbitrage If

Multiple Choice

There can be an opportunity for covered interest arbitrage if:

A) the interest rate is low and the exchange rate is high.
B) the forward/spot rate difference is either larger or smaller in percentage terms than the difference in the interest rates on two currencies.
C) there is a time lag on the settlement of the transactions.
D) the interest rate is high and the exchange rate is low.