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Assume you notice the following information. Complete the steps for an arbitrage trading strategy by choosing the appropriate option for each step. Spot (CHF/USD)=1.50 :

Assume you notice the following information. Complete the steps for an arbitrage trading strategy by choosing the appropriate option for each step. Spot (CHF/USD)=1.50 : 1 1 Year Forward (CHF/USD) = 1.60 : 1 1 Year Swiss interest rate of 8% in Swiss francs (CHF) 1 Year US interest rate of 4% in US Dollars (USD) You would borrow in this country: [ Choose ] You would then convert to this [ Choose] currency You would then lend in this country [Choose ] 4 In 1 year, you would convert loan proceeds to this currency [ Choose ] A You would convert the loan proceeds at this exchange rate: [Choose ]

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