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Casper Landsten-CIA (A). Casper Landsten is a foreign exchange trader for a bank in New...

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Casper Landsten-CIA (A). Casper Landsten is a foreign exchange trader for a bank in New York. He has $0.95 million (or its Swiss franc equivalent) for a short term money market investment and wonders if he should invest in U.S. dollars for three months, or make a CIA investment in the Swiss franc. He faces the following quotes: Arbitrage funds available $ 950,000 1.2809 Spot exchange rate (SFr/$) 3-month forward rate (SFr/$) 1.2742 U.S. Dollar annual interest rate 4.804 % Swiss franc annual interest rate 3.201 % and invest in the lower yielding currency, the Swiss franc , in order to earn covered interest arbitrage (CIA) profits. (Round to three decimal places The CIA profit potential is .5 %, which tells Casper Landsten he should borrow U.S. dollars and select from the drop-down menus.) The CIA profit amount is $. (Round to the nearest cent.)

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