Assume the current spot rate is Can$1.2803 and the one-year forward rate is Can$1.2745.Also assume the nominal risk-free rate in Canada is 4.8 percent while it is 4.2 percent in the U.S.Using covered interest arbitrage,you can earn a profit of ________ for every $1 invested over the next year.

Question

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Covered interest arbitrage involves borrowing in a currency with a lower interest rate, converting to a currency with a higher interest rate, and investing in a risk-free bond. The profit comes from the difference in interest rates and any change in the exchange rate. 
In this case, to earn a profit, we would borrow in USD at 4.2%, convert to CAD at the spot rate of Can$1.2803, and invest in a CAD risk-free bond earning 4.8%. After one year, we would receive Can$1.2803 x 1.048 = Can$1.3419. We would then convert back to USD at the forward rate of Can$1.2745 and receive $1.0516, for a profit of $0.0108 per USD invested.

Assume the Current Spot Rate Is Can$1