12. Casper LandstenCIA (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	$1,000,000
Spot Rate(SFr/$)	1.2810
3-Month forward rate(SFr/$)	1.2740
US-dollar 3-Month interest rate	4.800%
Swiss Franc 3-Month interest rate	3.200%

13. Casper LandstenUIA (B). 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 receiptsan uncovered interest arbitrage (UIA) transaction. Assess this decision.