Question: Casper Landsten, using the same values and assumptions as in Problem 12, decides to seek the full 4.800% return available in U.S. dollars by not

Casper Landsten, using the same values and assumptions as in Problem 12, decides to seek the full 4.800% return available in U.S. dollars by not covering his forward dollar receipts- an uncovered interest arbitrage (UIA) transaction. Assess this decision.

Arbitrage funds available.....................$1,000,000

Spot exchange rate (SFr/$).........................1.2810

3-month forward rate (SFr/$)......................1.2740

U.S. dollar 3-month interest rate..................4.800%

Swiss franc 3-month interest rate.................3.200%

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