Assume that a U.S. firm can invest funds for one year in the U.S. at 12% or invest funds in Brazil at 18%. The spot rate of the Brazilian real is $.1793 while the one-year forward rate of the real is also $.1793. If a U.S. firm uses covered interest arbitrage, which of the following price adjustments should result? O Spot rate of real increases, forward rate of real decreases. O Spot rate of real decreases, forward rate of real decreases. O Spot rate of real increases, forward rate of real increases. Spot rate of real decreases, forward rate of real increases. O Spot rate of real increases; forward rate of real remains constant.
