### Computing value of covered interest arbitrage

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Assume the current spot rate is C\$1.1875 and the one-year forward rate is C\$1.1724. The nominal risk-free rate in Canada is 4 percent while it is 3 percent in the U.S. Using covered interest arbitrage you can earn an extra _____ profit over that which you would earn if you invested \$1 in the U.S.

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