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The interest rate offered on (Norwegian) Krone is 0

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1. The interest rate offered on (Norwegian) Krone is 0.85%, which is quite low. Given the current Covid-19 pandemic, you expect the Krone to depreciate by 0.3%. For the international Fisher effect (IFE) to hold between Norway and Australia, the Australian interest rate should be ____. A. 0.55% B. 0.85% C. 1.15% D. 1.85% E. 2.00%

2.  Covered Interest Arbitrage. Assume the following information: Spot rate of Canadian dollar = $.80 90 day forward rate of Canadian dollar $.79 90-day Canadian interest rate = 2.5% 90 day U.S. Interest rate
   Given this information, what would be the yield (percentage return) to a U.S. investor who used covered interest arbitrage? (Assume the investor in- vests Sl million.) What market forces would occur to eliminate any further possibilities of covered in- terest arbitrage?