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BONUS ( 5 Points): Assume the following information: US deposit rate for 1 year = 10% US borrowing rate for 1 year = 11% Swiss

BONUS ( 5 Points):

Assume the following information:

US deposit rate for 1 year = 10%

US borrowing rate for 1 year = 11%

Swiss deposit rate for 1 year = 7%

Swiss borrowing rate for 1 year = 11%

Swiss forward rate for 1 year = $0.45

Swiss france spot rate = $0.42

Also assume that a US exporter denominates its Swiss exports in Swiss francs and expects to received SF 6,000,000 in 1 year.

Using the information above, what will be the approximate value of these exports in US dollars, 1 year from now, given that the firm executes a forward hedge?

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