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