(a)Calculate the effective financing rate of a six-month Swiss franc loan based on the given information:

Swiss six month interest rate4.55-6.75

Initial exchange rate (AUD/CHF) 1.1575-1.1625

Exchange rate on maturity (AUD/CHF)1.1375-1.1465

b.The current one-year US interest rate is 9% p.a., and AUD/USD exchange rate is 1.3100. The exchange rate that is expected to prevail in one year has the following probability distribution:

AUD/USD =Probability

1.25 =0.08

1.29= 0.12

1.31= 0.15

1.35=0.30

1.38 =0.35

Using above information, calculate the expected value and the standard deviation of the effective financing rate in USD