1. If the Swiss bank swaps US$ payments for Sf payments at the current spot exchange rate, what are the cash flows on the swap? What are the cash flows on the entire hedged position? Assume that the U.S. dollar appreciates at the rates in part (e).

What are the cash flows on the swap and the hedged position if actual spot exchange rates are as follows:

End of year 1: Sf1.55/US$

End of year 2: Sf1.47/US$

End of year 3: Sf1.48/US$