Assume the current spot rate is CAD1.2490 and the 1-year forward rate is CAD1.2445. The nominal risk-free rate in Canada is 2.22 percent while it is 1.84 percent in the U.S. Using covered interest arbitrage you can earn an extra profit over that which you would earn if you invested $1000 in the U.S. for one year. $6.90 $7.10 $7.30 $7.50 $7.70