Suppose that the six-month interest rate in the United States is 2%, while the six-month interest rate in Britain is 4%. Further, assume the spot rate of the pound is 1.25. Suppose that you have $500,000 with which to attempt covered interest arbitrage. Assume the forward rate is $1.22596, as you just calculated, and the interest rates are the same as have been used throughout this problem. To start, you exchange your $500,000 (at the spot rate of 1.25) for 400,000pound. After depositing these funds for 6 months, and earning a return of 4%, your deposit grows to 416,000pound. When you convert your 416,000pound back to dollars, you end up with approximately , for a profit of about over your original $500,000. However, had you simply deposited your $500,000 in an account and accrued 2% interest, you would have , for a profit of . This example illustrates that covered interest arbitrage offer a significantly larger return than simply depositing the funds in a domestic account under internet rate parity.