An exchange rate trader has the following quotes for the US dollar and the Swiss franc on her Reuters screen:

Currency	Spot Rates	180-Day forward rates	180-Day Interest Rates
US Dollar	CHF 1.015/$	CHF 1.025/$	0.25%
Swiss Franc			2%

a) Calculate the 180-day annualised forward discount/premium for the Swiss Franc against the US dollar. Describe what these calculations imply. (5 marks) b) Calculate the theoretical 180-day forward rate and indicate whether there is an arbitrage opportunity. (Hint: Use the Interest Rate Parity theorem.) (5 marks) c) Assume that you are authorized to work with $100 million for the purpose of covered interest arbitrage. Calculate the arbitrage profits in dollars. (8 marks) d) What is the maximum fee that the trader would be willing to pay to carry out this transaction? (2 marks)