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Assess tonys decision covered interest arbitrage cia

Tony Campbell is a foreign exchange trader for a bank in New York. He has $1 million (or its Swiss franc equivalent) for a short-term money market investment and Tony wonders if he should invest in U.S. dollars for three months, or make a covered interest arbitrage investment
in the Swiss franc. He faces the following quotes:

Arbitrage funds available $1,000,000

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%

Assess Tony's decision Covered Interest Arbitrage (CIA) opportunity. Should he undertake CIA?

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