Assume the current spot rate Is C$1.1103 and the one-year forward rate Is C$1.1025. The nominal risk-free rate In Canada Is 3.5 percent while it Is 4 percent In the U.S. Using covered Interest arbitrage you can earn an extra profit over that which you would earn If you Invested $1 In the U.S. $.0018 $.0015 $.0006 $.0023 $.0008