Casper Landsten—CIA (A). Casper Landsten is a foreign exchange trader for a bank in New York. He has $1 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.

He faces the following quotes:

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%