A bank purchases a six$-$month $$3$ million Eurodollar deposit at an interest rate of $7\mathrm{.}3$ percent

per year. It invests the funds in a six$-$month Swedish krona bond paying $7\mathrm{.}5$ percent per year.

The current spot rate of U$.$S$.$ dollars for Swedish krona is $$\frac{0\mathrm{.}1800}{?}$ SKr$.$

a$.$ The six$-$month forward rate on the Swedish krona is being quoted at $$\frac{0\mathrm{.}1810}{S}Kr.$ What is

the net spread earned for six months on this investment if the bank covers its foreign

exchange exposure using the forward market?

b$.$ At what forward rate will the spread be only $1$ percent per year?

Please answer A and B$,$ thank you.