Peder Mueller$-$CIA $($A$).$ Peder Mueller is a foreign exchange trader for a bank in New York. He has USD$1\mathrm{.}05$ million $($or its Swiss

franc equivalent$)$ for a short$-$term money market investment and wonders whether he should invest in U$.$S$.$ dollars for three months

or make a CIA investment in the Swiss franc $($CHF$).$ He faces the following quotes: $.$

The CIA profit potential is

$\%,$ which tells Casper Landsten he should borrow

and invest in the

yielding currency, the

$,$ in order to earn covered interest arbitrage $($CIA$)$ profits. $($Round to three de

select from the drop$-$down menus.$)$

Data table

$($Click on the following icon $$ in order to copy its contents into a spreadsheet.$)$The CIA profit potential is dots$\%,$ which tells Casper Landsten he should borrow Peder Mueller$-$CIA $($A$).$ Peder Mueller is a foreign exchange trader for a bank in New York. He has USD$1\mathrm{.}05$ million $($or its Swiss

franc equivalent$)$ for a short$-$term money market investment and wonders whether he should invest in U$.$S$.$ dollars for three months

or make a CIA investment in the Swiss franc $($CHF$).$ He faces the following quotes: $.$

The CIA profit potential is $\%,$ which tells Casper Landsten he should borrow

and invest in the

yielding currency, the

$,$ in order to earn covered interest arbitrage

hree decimal places and

select from the drop$-$down menus.$)$

Swiss francs

U$.$S$.$ dollars

Data table

$($Click on the following icon $$ in order to copy its contents into a spreadsheet.$)$

Arbitrage funds available

USD$1,050,000$

Spot exchange rate $($CHF $=$ USD$1\mathrm{.}00)$

$1\mathrm{.}2815$

$3-$month forward rate $($CHF $=$ USD$1\mathrm{.}00)$

$1\mathrm{.}2741$

U$.$S$.$ dollar $3-$month interest rate

$4\mathrm{.}799\%$

Swiss franc $3-$month interest rate

$3\mathrm{.}196\%$