Casper Landsten is a foreign exchange trader for a bank in New York. Using the values and assumptions below, he decides to seek the full 4.8% return available in U.S. dollars by not covering his forward dollar receipts- an uncovered interest arbitrage (UIA) transaction.

How much money does he expect to earn (in dollars)?

Arbitrage funds available $1,000,000 (or SFr equivalent)

Spot exchange rate (SFr/$) 1.2810

3-month forward rate (SFr/$) 1.2740

Expected spot rate in 90 days (SFr/$) 1.2700

U.S. Dollar annual interest rate 4.8%

Swiss franc annual interest rate 3.2%