Peder Mueller is a foreign exchange trader for a bank in New York. Using the values and assumptions$$ here, he decides to seek the full $4\mathrm{.}795\%$ return available in U$.$S$.$ dollars by not covering his forward dollar receiptslong dashan uncovered interest arbitrage$($UIA$)$ transaction. Assess this decision.

The uncovered interest arbitrage$($UIA$)$ profit amount is $$$

Arbitrage funds available

USD$950$ comma $000$

Spot exchange rate $($CHFequals$$USD$1\mathrm{.}00)$

$1\mathrm{.}2813$

$3-$month forward rate $($CHFequals$$USD$1\mathrm{.}00)$

$1\mathrm{.}2739$

Expected spot rate in $3$ months $($CHFequals$$USD$1\mathrm{.}00)$

$1\mathrm{.}2698$

U$.$S$.$ dollar$3-$month interest rate

$4\mathrm{.}795\%$

Swiss franc$3-$month interest rate

$3\mathrm{.}196\%$