5. Assume the following information:

1-year deposit rate offered by U.S. banks	=	12%
1-year deposit rate offered on Swiss francs	=	10%
1-year forward rate of Swiss francs	=	$.62
Spot rate of Swiss franc	=	$.60

1. A Swiss investor have Swiss francs (CHF) 1,000,000 to execute covered interest arbitrage (i.e., convert CHF into US$, invest in the U.S., and use forward contracts to hedge foreign exchange rate risk). What is the yield to the Swiss investor who conducts covered interest arbitrage? Can the Swiss investor earn a higher return than investing at home (i.e., Switzerland)? Please show all your work.