Samiya Jamal is a foreign exchange trader for a bank in New York. She has $1 million (or its Swiss franc equivalent) at her disposal for a short-term money market investment. Samiya wonders if she should invest in U.S. dollars for three months or make a covered interest arbitrage (CIA) investment in the Swiss franc for three months. She faces the following quotes:

You are requested to help her decide what to do.

Show all your calculations (in steps or in the drawing)

Assumptions		Value	SFr. Equivalent
Arbitrage funds available		$1,000,000	SFr. 1,281,000
Spot exchange rate (SFr./$)		1.2810
3-month forward rate (SFr./$)		1.2740
U.S. dollar 3-month interest rate		4.800%
Swiss franc3-month interest rate		3.200%