a) What is the role of arbitrage in the foreign exchange markets? Use an example to explain your answer. (4 marks) b) The interest rate in the U.S. is 4%, in Switzerland it is 3%. The spot rate is 1.0232 USD to the Swiss franc. A U.S. based hotel chain needs to project forward exchange rates for the next five years. Complete the table below. Year Spot Rate x rate differential Forward Rate 0 1 2 3 4 5 (8 marks) c) What are some of the potential risks, other than exchange rate risk, that need to be considered in foreign direct investment decisions. (9 marks)