Problem:
Assume the following information:
Spot Rate today of Swiss franc = $.60
1-year forward rate as of today for Swiss franc = $.63
Expected spot rate 1-year from now = $.64
Rate on 1-year deposits denominated in Swiss francs = 7%
Rate on 1-year deposits denominated in US dollars = 9%
From the perspective of US investors with $1,000,000, what would be rate of return under covered interest arbitrage?