1.) (15 points) Our investment manager hedges a portfolio of Swiss Government bonds with a 6-month forward contract. The current spot rate is Swiss francs .80/US$ and the 180-day forward rate is Swiss francs .75/US$. At the end of the 6-month period, the Swiss Government bonds have risen in value by 6.00% (in Swiss francs terms) and the spot rate is now Swiss francs . 70/US$. A.) If the Bonds earn interest at the annual rate of 8.00%, paid semi-annually, what is the investment manager's total US$ return on the hedged Swiss Government bonds? B.) What would the return on the Swiss bonds have been without hedging? C.) What was the true cost of the forward contract? 1.) (15 points) Our investment manager hedges a portfolio of Swiss Government bonds with a 6-month forward contract. The current spot rate is Swiss francs .80/US$ and the 180-day forward rate is Swiss francs .75/US$. At the end of the 6-month period, the Swiss Government bonds have risen in value by 6.00% (in Swiss francs terms) and the spot rate is now Swiss francs . 70/US$. A.) If the Bonds earn interest at the annual rate of 8.00%, paid semi-annually, what is the investment manager's total US$ return on the hedged Swiss Government bonds? B.) What would the return on the Swiss bonds have been without hedging? C.) What was the true cost of the forward contract